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(Alliance News) - London's FTSE 100 is called to open slightly higher on Wednesday, ahead of a UK consumer price inflation report, while the pound perked up above the USD1.34 mark and could continue to climb should the data comes in hotter-than-expected.
Elsewhere, reports from M&S and JD Sports put the retail sector in focus this morning.
IG says futures indicate the FTSE 100 to open 9.2 points higher, 0.1%, at 8,790.32 on Wednesday. The index of London large-caps rose 81.81 points, 0.9%, at 8,781.12.
Against the dollar, sterling shot up to USD1.3431 on Wednesday morning, from USD1.3363 at the time of the London equities close on Tuesday. The euro climbed to USD1.1333 from USD1.1258. Against the yen, the dollar fell to JPY143.69 from JPY144.62.
Sterling will be in focus on Wednesday morning, amid the release of the latest UK consumer price index report at 0700 BST.
The pace of consumer price inflation is expected to have picked up to 3.3% in April, from 2.6% in March, according to consensus cited by FXStreet.
The Bank of England has been cutting interest rates too quickly, its chief economist has warned.
Huw Pill said the pace of interest rate reductions since August last year has been "too rapid" given the balance of risks to UK inflation.
Commerzbank analyst Thu Lan Nguyen commented: "Inflation figures for April will be published in the UK this morning. These are likely to be watched with interest after Bank of England chief economist Huw Pill warned only yesterday that the central bank was cutting interest rates too quickly. He was one of two MPC members who voted against a rate cut at the last meeting. He cited the continuing high price pressure as the reason. This refers in particular to robust wage growth and the resulting stubborn services inflation.
"Thanks to US customs policy, the economic outlook looks anything but rosy at the moment. This makes it tempting not to worry about the currently still high inflation. Analysts surveyed by Bloomberg today expect consumer prices to rise by a strong 1% compared to the previous month. If the price increase turns out to be even stronger, Pill could find more favour with the MPC and interest rate cut speculation could be dampened accordingly."
In New York, the Dow Jones Industrial Average fell 0.3% on Tuesday. The S&P 500 and the Nasdaq Composite each lost 0.4%.
US President Donald Trump's tariff plans are likely to push prices higher despite recent attempts at de-escalating his trade wars, a senior Federal Reserve official said Tuesday.
Trump's on-again, off-again tariff rollout since his return to office in January has unnerved investors and rocked financial markets.
Recent deals to reduce tariffs on China and Britain suggest the administration is serious about wanting to negotiate deals to lower trade barriers and calm global markets.
But it may not be sufficient to stop businesses from raising prices, St Louis Federal Reserve Bank President Alberto Musalem told the Economic Club of Minnesota, according to prepared remarks.
"Looking ahead, price pressures appear to be building," said Musalem, a voting member of the Fed's rate-setting committee this year.
The yield on the 10-year Treasury stretched to 4.51% on Wednesday morning UK time, from 4.48% at the time of the London equities close on Tuesday. The 30-year yield widened to 5.00% from 4.97%.
In Tokyo on Wednesday, the Nikkei 225 was down 0.3%. In China, the Shanghai Composite was 0.4% higher. The Hang Seng Index in Hong Kong rose 0.9%. In Sydney, the S&P/ASX 200 added 0.6%.
Gold traded at USD3,302.94 an ounce early Wednesday, up from USD3,276.82 late Tuesday afternoon. Brent rallied to USD66.28 from USD65.09.
SPI Asset Management analyst Stephen Innes commented: "Crude and gold just caught a fresh bid—not from macro data or inventory trends, but from geopolitics getting dragged back to centre stage. A CNN report dropped like a depth charge Monday, suggesting new US intelligence points to Israel preparing for potential strikes on Iranian nuclear facilities."
The domestic corporate calendar on Wednesday has full-year results from sports retailer JD Sports Fashion, clothing and food retailer Marks & Spencer, water utility Severn Trent and electricity generator SSE.
By Eric Cunha, Alliance News news editor
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