15th Oct 2013 06:37
LONDON (Alliance News) - UK stocks are called to open higher Tuesday as investors grow increasingly optimistic that the US government will avoid a debt default.
London's major equity indices are expected to follow Asian stocks higher, with traders picking up equities amid hopes that US lawmakers will end the budget and debt-ceiling impasse before the looming deadline Thursday. Asian stocks are trading notably higher Tuesday. Ahead of the UK market open, both the Nikkei and the Hang Seng are up 0.3%.
Similar sentiment was seen in the US on Monday. After starting the day lower, the DJIA and the S&P 500 closed 0.4% higher, whilst the Nasdaq Composite closed 0.6% higher.
Senate leaders from warring political parties sent a glimmer of hope through stalled budget and debt negotiations as each declared he was optimistic that a solution was within reach, just two days before the government is forecast to run out of money.
Democratic majority leader Harry Reid said he was "very optimistic we will reach an agreement this week that's reasonable in nature." Shortly after, Republican minority leader, Mitch McConnell, said he shared Reid's optimism "that we are going to get a result that will be acceptable to both sides."
In a signal of a thaw in the frosty relationship between the two men, Reid also saluted McConnell as "my friend" and thanked him for his "diligent efforts" to find a solution to raise the country's borrowing limit, avoid default and reopen the government.
In a statement, the White House reported that "important progress" was being made by the Senate leaders. The progress prompted a delay in a meeting with members of Congress, involving US President Barack Obama and Vice President Joe Biden, as Senate leaders were afforded more time to continue making progress. According to reports, the deal would extend the Treasury Department's borrowing authority until mid-February and end the shutdown that has dragged on for two weeks.
Michael Hewson, senior market analyst at CMC Markets, commented that, "markets simply don't believe that US politicians would run the risk of taking us past the deadline on Thursday."
Both IG and CMC Markets are called the FTSE 100 to open higher, at approximately 6,540 points.
Watch out for Royal Mail. After Friday's debut, unconditional trading, open to retail investors, begins Tuesday.
Still ahead in the data calendar Tuesday, UK CPI, PPI, and RPI are released at 0930 BST. EU and German economic sentiment results are expected at 1000 BST. In the US, New York Empire State manufacturing index is expected at 1330 BST, with Redbook index data at 1355 BST.
By James Kemp; [email protected]; @jamespkemp
Copyright 2013 Alliance News Limited. All Rights Reserved.
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