16th Dec 2020 06:59
(Alliance News) - Stocks in London on Wednesday are seen following Wall Street higher as markets look for progress in stimulus talks in Washington.
As well as government stimulus, focus lies on the US Federal Reserve's last policy decision of 2020 at 1900 GMT.
"We think the Federal Reserve will stick to its game plan without any major changes. We may see the Fed changing its QE forward-guidance to outcome-based forward guidance but we think the Fed will continue buying at current pace for some time," said Danske Bank.
IG says futures indicate the FTSE 100 index of large-caps to open 29.48 points higher, or 0.5%, at 6,542.80 on Wednesday. The FTSE 100 closed down 18.51 points, or 0.3%, at 6,513.32 on Tuesday.
Wednesday's European open follows a surge in New York overnight.
In the US on Tuesday, Wall Street rallied, with the Dow Jones Industrial Average ending up 1.1%, the S&P 500 up 1.3% and the Nasdaq Composite up 1.3%.
"US policy support expectations are building again after signs of progress on a fiscal deal between House Speaker Nancy Pelosi and Senate Majority leader Mitch McConnell. Reports suggest the discussion focused on headline numbers. The expectation is growing now that a coronavirus deal will be attached to an omnibus bill to extending government funding beyond Friday's deadline," said Axi's Stephen Innes.
Lawmakers are up against two deadlines: the end of the week, when their session ends, and December 26, when the last benefit programs paid for by the CARES Act that support millions of unemployed people will expire.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.3%. In China, the Shanghai Composite is flat, while the Hang Seng index in Hong Kong is up 0.8%.
Against the yen, the dollar was quoted at JPY103.54 versus JPY103.72.Â
Japan's private sector downturn continued in the last month of 2020, IHS Markit data showed. The au Jibun Bank flash Japan composite purchasing managers' index print for December was 48.0 points, slightly less than the final November reading of 48.1 and still below the neutral 50.0 mark and into contraction territory.
The flash headline au Jibun Bank Japan manufacturing PMI, a measure of manufacturing sector health, increased to 49.7 points in December from 49.0 in November, getting closer to the neutral mark. The au Jibun Bank flash Japan services business activity index, meanwhile, dropped further to 47.2 in December from November's 47.8 final reading.
Meanwhile, the value of outbound shipments from Japan declined 4.2% year on year to JPY6.1 trillion, or USD59 billion, in November, the government said, as the Covid-19 pandemic decreased demand in many parts of the world. The reading represented the 24th straight month of fall, according to a preliminary report issued by the Finance Ministry.
Sterling was quoted at USD1.3465 early Wednesday, higher than USD1.3401 at the London equities close on Tuesday. The euro traded at USD1.2161 early Wednesday, firming on USD1.2151 late Tuesday.
Gold was quoted at USD1,857.22 an ounce early Wednesday, higher than USD1,847.70 on Tuesday. Brent oil was trading at USD50.57 a barrel, soft on USD50.63 late Tuesday.
The economic events calendar on Wednesday has UK inflation data at 0700 GMT and US retail sales figures at 1330 GMT. There are also PMI readings from Germany, eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively.
The UK corporate calendar on Wednesday has interim results from electrical goods retailer Dixons Carphone. There are also trading statements from distribution firm Bunzl and oilfield services company Petrofac.
By Lucy Heming; [email protected]
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