(Alliance News) - Stock prices in London are seen opening lower on Wednesday, tracking declines in US and Asian equity markets overnight, while the European Central Bank-led forum in Portugal concludes with a policy panel featuring the some of the world's most prominent central bankers.
IG futures indicate the FTSE 100 index is to open 47.81 points lower at 7,275.60. The index closed up 65.09 points, or 0.9%, at 7,323.41 Tuesday, completing a three-day winning streak.
However, New York ended sharply lower on Tuesday, with the Dow Jones Industrial Average down 1.6%, S&P 500 down 2.0%, and Nasdaq Composite down 3.0%.
All three key stock indices ended down following a US consumer confidence reading at its lowest level in more than a year on surging inflation.
The downbeat report was due in part to the feeling that higher prices will persist, suggesting US consumers are not confident the Federal Reserve's aggressive efforts to tame inflation will have the desired effect.
In Asia on Wednesday, the Japanese Nikkei 225 index was down 1.0%. In China, the Shanghai Composite was down 0.9%, while the Hang Seng index in Hong Kong was down 1.8%. The S&P/ASX 200 in Sydney was down 0.8%.
The hefty selling came after European equity markets rallied on Tuesday on hopes that any signs of contraction could give central banks room to ease up on their pace of monetary tightening.
"Recently, it seems markets have been caught in between positioning for a 'peak inflation' and fine-tuning expectations of the necessary magnitude of central bank tightening vs a 'stagflation scenario' where growth would slow down markedly but central banks would be forced to continue to hike aggressively as inflation remains high," commented analysts at Danske Bank.
UK shop price inflation accelerated to a near 14-year high in June, numbers showed on Wednesday.
According to the latest British Retail Consortium-NielsenIQ tracker, the UK shop price index grew 3.1% yearly in June, racing from a 2.8% increase in May. June's climb was markedly above the 12-month average annual growth rate of 1.0%, highlighting how much inflationary pressures have intensified in recent months. It was also the highest rate of shop price inflation since September 2008.
Annual food inflation quickened to 5.6% in June, from 4.3% in May, to mark the highest rate since 11 years earlier.
The pound was quoted at USD1.2202 early Wednesday, up from USD1.2191 at the London equities close Tuesday.
The euro was priced at USD1.0511, down from USD1.0531. Against the yen, the dollar was trading at JPY136.02 in London, lower against JPY136.22.
Brent oil was quoted at USD117.06 a barrel Wednesday morning, soft from USD117.21 late Tuesday. Gold stood at USD1,821.35 an ounce, slightly higher against USD1,820.14.
Oil prices dipped, though remain elevated, following a run-up in recent days on expectations that demand will continue to rise - despite recessionary talk - and that supplies remain tight due to the ban on imports from Russia.
Wednesday's economic calendar has eurozone consumer confidence at 1000 BST, German inflation at 1300 BST and US GDP at 1330 BST. In addition, market focus will lie on remarks from US Federal Reserve Chair Jerome Powell, Bank of England Governor Andrew Bailey and European Central Bank President Christine Lagarde in Sintra, Portugal.
The UK corporate calendar on Wednesday has first-quarter results from B&M European Value Retail and full-year results from Moonpig and Mulberry.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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