LONDON (Alliance News) - UK shares are set to open higher Tuesday, after being dragged down on Monday by the decline in the gold price, which weighed upon precious metals miners in both the FTSE 100 and FTSE 250.
"European markets underwent a fairly subdued session yesterday with the FTSE 100 in particular struggling to make much headway above 6,800 due to continued weakness in commodity prices, with the sudden accelerated drop in the gold price knocking chunks out of the mining sector," says CMC Markets chief market analyst Michael Hewson.
"A stronger US dollar, along with lower demand expectations has knocked commodity prices for six in the last few months, with gold playing catch up yesterday, falling below USD1,100 for the first time since 2010, as the prospects for a rise in US [interest] rates against a benign inflation backdrop saw gold traders pile out of the yellow metal in the past few days," Hewson says.
Gold is quoted early Tuesday at USD1,102.45 an ounce. Meanwhile, the pound is slightly higher against the dollar Tuesday morning at USD1.5564.
IG says futures indicate the FTSE 100 to open 19 points higher at 6,808.5. The index closed on Monday up 0.2% at 6788.69.
Greece cleared on Monday its first hurdle in the bailout crisis by repaying the money due to the International Monetary Fund and the European Central Bank with the European Commission's EUR7.16 billion bridge-loan, and banks in the crisis struck country opened partially despite stock exchange closure.
In addition, the Greek government also paid money owed to the Greece's central bank. In total, the government repaid EUR6.8 billion to its creditors. In an official release, Gerry Rice, Director of Communications at the International Monetary Fund, confirmed that Greece repaid the totality of its arrears worth about EUR2.0 billion to the IMF.
"Greece is therefore no longer in arrears to the IMF. As we have said, the Fund stands ready to continue assisting Greece in its efforts to return to financial stability and growth," said Rice.
Wall Street ended higher Monday. The DJIA and the S&P 500 both ended up 0.1%, and the Nasdaq Composite closed up 0.2%, reaching a new record closing high of 5,218.85.
US tech giants Apple, Microsoft or Yahoo are set to report results Tuesday, following IBM on Monday.
In Asia on Tuesday, the Japanese Nikkei 225 trades up 0.8%. In China, the Hang Seng is up 0.6% and the Shanghai Composite is up 0.8%.
In the economic calendar Tuesday, there is UK public sector net borrowing at 0930 BST and US Redbook index at 1355 BST.
In a busier UK corporate calendar, there are half-year results from IG Group Holdings, Croda International and full-year results from PZ Cussons. Royal Mail, Victrex, Cable & Wireless Communications, and AO World all issue trading statements.
By Daniel Ruiz; danielruiz@alliancenews.com
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