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(Alliance News) - Stocks in London are set to open slightly lower on Wednesday, as an expected monetary policy shift from the Bank of Japan failed to materialise.
IG says futures indicate the FTSE 100 index of large-caps to open 2.63 points lower at 7,848.40 on Wednesday. The FTSE 100 index closed down 9.04 points, or 0.1%, at 7,851.03 on Tuesday.
Japan's central bank left its ultra-easy monetary policy unchanged.
Officials shocked the market last month by adjusting one of its policy tools, widening the band in which it allows rates for 10-year government bonds to move. The bank had said the move would "improve market functioning", and the surprise decision saw the Japanese currency gain ground against the dollar after months of weakening over the gap between Japanese and US central bank policy.
On Wednesday policymakers left the yield curve control range intact and said the BoJ would continue with "large-scale" purchases of government bonds to support the parameters.
In the wake of the decision, the Japanese yen weakened significantly against the US dollar, while stocks in Japan surged.
Against the yen, the dollar was quoted at JPY130.71, sharply higher versus JPY128.18. In Tokyo, the Nikkei 225 index closed up 2.5%.
Elsewhere in Asia on Wednesday, stocks were directionless. The Shanghai Composite was flat, while the Hang Seng index in Hong Kong was up 0.1%. The S&P/ASX 200 in Sydney closed up 0.1%.
In the US on Tuesday, Wall Street ended mostly lower as trading resumed following a public holiday. The Dow Jones Industrial Average fell 1.1% and the S&P 500 by 0.2%, but the Nasdaq Composite edged up 0.1%.
Focus will now be on the latest consumer price index reading for the UK at 0700 GMT. Investors will be hoping that inflationary pressures had continued to subside in December. The reading for November was 10.7%.
The UK inflation data will be a key in the Bank of England's next policy decision in February. Markets currently expect the central bank to lift UK interest rates by 50 basis points.
CMC Market's Michael Hewson said the decision was "unlikely to be unanimous", however, given the three-way split last time.
Sterling was quoted at USD1.2292 early on Wednesday, higher than USD1.2278 at the London equities close on Tuesday.
The euro traded at USD1.0786 early Wednesday, lower than USD1.0804 late Tuesday.
Gold was quoted at USD1,902.94 an ounce early on Wednesday, significantly lower than USD1,912.88 on Tuesday. Brent oil was trading at USD86.71 a barrel, higher than USD85.56.
In Wednesday's corporate calendar, there are trading statements from Primark-owner Associated British Foods, luxury fashion house Burberry, and retailer WH Smith.
Already out, Just Eat Takeaway said it swung to positive earnings before interest, tax, depreciation and amortisation of EUR150 million in the second half of 2022 from negative EUR134 million in the first half, meaning it posted positive adjusted Ebitda of EUR16 million for all of 2022, swung from negative EUR350 million in 2021. Just Eat expects positive adjusted Ebitda of EUR225 million in 2023.
In the economic calendar, the UK will post a CPI and PPI print at 0700 GMT. The US will publish its own PPI data at 1330 GMT.
By Heather Rydings, Alliance News senior economics reporter
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