(Alliance News) - Stocks in London are set to open higher on Tuesday, despite some mixed trade in Asia and New York, ahead of an inflation reading in the US and UK employment data.
The readings will push the US Federal Reserve and the Bank of England into the spotlight, ahead of decisions from the central banks next week. The US data is released at 1230 GMT, after the UK data at 0700 GMT.
IG says futures indicate the FTSE 100 to open 57.7 points higher, 0.8%, at 7,726.93 on Tuesday. The index of London large-caps closed up 9.49 points, 0.1%, at 7,669.23.
In New York, the Dow Jones Industrial Average rose 0.1% on Monday, though the S&P 500 and Nasdaq Composite fell 0.1% and 0.4%, respectively.
In Tokyo, the Nikkei 225 closed down 0.1%. The Shanghai Composite was 0.4% lower, though the Hang Seng shot up 2.8%. The S&P/ASX 200 in Sydney added 0.1%.
The pound was quoted at USD1.2820 early Tuesday, from USD1.2801 at the London equities close on Monday. The euro stood at USD1.0938, rising from USD1.0923. Against the yen, the dollar climbed to JPY147.37 from JPY146.89.
Commerzbank analyst Michael Pfister commented: "Accordingly, I would still be a little cautious about following the recent weakness of the dollar too much. After all, we have seen the first cracks in the story of the US soft landing. And that certainly justifies some dollar weakness. Ultimately, however, the Fed is likely to be driven by inflation. And today's figures are more likely to support the hawkish voices on the FOMC. If today's figures are strong again, the market therefore may push back its rate cut expectations a bit. The USD should benefit from this.
"A little away from the focus on the USD movement, the pound has emerged as one of the year's top two performers among the major currencies in recent weeks. A few days ago, USD-GBP was trading at its highest level since late July. This is certainly impressive given that the pound was kind of a problem child last year."
The analyst continued: "The only question is how long the pound's strength will last. At the moment it is still a rather shaky strength. Not like the USD strength of late last summer, which was fuelled for months by strong data and an equally hawkish Fed. Rather, it is a fragile little plant that could break again in the face of headwinds."
According to FXStreet cited consensus, the US annual consumer price inflation rate is expected to have remained at 3.1% in February. The UK unemployment is expected to have also been unmoved at 3.8% for the three months to January, where it stood in the three months to December.
Also on the docket on Tuesday, there is a German consumer price index reading at 0700 GMT.
In Tuesday's UK corporate calendar, there are full-year results from housebuilder Persimmon, as well as Domino's Pizza Group.
Brent oil was quoted at USD82.53 a barrel early Tuesday in London, up from USD82.36 at the time of the last European equities close. Gold was quoted at USD2,175.48 an ounce, down from USD2,184.09.
"Your good old gold is consolidating gains near record high, as well. Any rebound in US yields on a potential CPI disappointment could trigger profit taking and a pullback at the current overbought market levels, but softer yields on a soothing CPI could encourage another test of the USD2,200 level," Swissquote analyst Ipek Ozkardeskaya commented.
By Eric Cunha, Alliance News news editor
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