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LONDON (Alliance News) - Stock prices in London on Wednesday are set to pull back from Tuesday's rally, while the pound remained below the USD1.30 mark after disappointing UK data released earlier in the week.
IG says futures indicate the FTSE 100 index of large-caps to open 11.27 points lower at 7,166.10 on Wednesday. The FTSE 100 index closed up 2.0%, or 143.24 points, at 7,177.37 on Tuesday.
After Tuesday's "bumper" move higher, stocks in London are set to pull back slightly on Wednesday, said CMC Markets chief market analyst Michael Hewson.
"Investors piled back into equity markets, sending the FTSE 100 to three-month highs, and European stocks to their highest levels in two months. The rise in the FTSE was helped by a weaker pound as well as a well-received set of numbers from oil giant BP," explained Hewson.
Sterling had slumped on Tuesday after the latest UK services Purchasing Managers' Index came in at 50.1 in January, down from 51.2 in December and only marginally above the stagnation mark of 50.
The pound was quoted at USD1.2949 early Wednesday, steady compared to USD1.2936 at the London equities close on Tuesday but remaining substantially below USD1.3059 as at the equities close on Monday.
The services data on Tuesday followed news on Monday that UK construction growth eased further in January to its weakest level in ten months, while on Friday last week figures showed the country's manufacturing sector made a lacklustre start to 2019, slipping to its lowest level in three months.
In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average closing up 0.7%, the S&P 500 up 0.5% and Nasdaq Composite gaining 0.7%.
After the New York close, entertainment giant Walt Disney reported a fall in profit as revenue edged marginally lower.
California-based Disney's first-quarter profit dropped to USD2.79 billion or USD1.86 per share from USD4.42 billion or USD2.91 per share a year before. The previous year's bottom line included a USD1.6 billion one-time tax benefit associated with US federal tax reforms.
Revenue for the quarter was relatively flat at USD15.30 billion compared to USD15.35 billion a year before.
Focus on Tuesday evening in the US was on US President Donald Trump's State of the Union address, though investors looking for a "fresh trading catalyst" were left disappointed, said Jasper Lawler, head of research at London Capital Group.
"The US dollar remained steady following President Trump’s address. Whilst the President touched on Chinese trade relations and the budget there was nothing new for traders to sink their teeth into," said Lawler.
Urging unity and cooperation across party lines, Trump on Tuesday hailed the country's economy while honing in on his signature issues of illegal immigration and a wall on the border with Mexico during his State of the Union address.
In a response to Trump's speech, House Speaker Nancy Pelosi accused the president of "fear-mongering and manufacturing a crisis at the border".
Trump's insistence on the wall led to a partial government shutdown in December and January, and funding again runs out on February 15, with no deal in sight.
In Asia on Wednesday, the Japanese Nikkei 225 index closed closed up 0.1%. Financial markets in China and Hong Kong were closed for the Lunar New Year holiday.
Trump said he would meet North Korean leader Kim Jong Un in Vietnam on February 27-28 for their second summit. "As part of a bold new diplomacy, we continue our historic push for peace on the Korean Peninsula," he told Congress in his State of the Union address.
In the UK corporate calendar on Wednesday are interim results from housebuilders Barratt Developments and Redrow, while lender CYBG and water firm Severn Trent put out trading statements. Later, at 1200 GMT, are annual results from pharmaceuticals giant GlaxoSmithKline.
In the economic calendar on Wednesday are German factory orders at 0700 GMT followed by the US trade balance at 1330 GMT.
