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(Alliance News) - London's FTSE 100 is called to open higher on Wednesday, though equities in Asia were mixed, and New York closed mostly lower, on the back of hawkish comments from Federal Reserve Chair Jerome Powell.
Eyes will be on what the latest UK inflation reading released at 0700 BST will mean for the Bank of England, meanwhile.
IG says futures indicate the FTSE 100 to open 25.8 points higher, 0.3%, at 7,846.16 on Wednesday. The index of London large-caps plunged 145.17 points, 1.8%, at 7,820.36 on Tuesday.
The Dow Jones Industrial Average ended 0.2% higher on Tuesday in New York. The S&P 500 fell 0.2% and the Nasdaq Composite lost 0.1%.
The Fed's ongoing fight against inflation could take "longer than expected," the head of the US central bank said Tuesday, further paring back the chances of early rate cuts.
"The recent data have clearly not given us greater confidence, and instead indicate that it's likely to take longer than expected to achieve that confidence," Jerome Powell said during an event in Washington on Tuesday.
"That said, we think policy is well positioned to handle the risks that we face," he added.
In March, Fed policymakers pencilled in three rate cuts for this year, leading markets to price in the first of them as early as June.
But hot March consumer inflation data caused many traders to reevaluate and push back their expectations.
"Powell's cautious tone, suggesting prolonged inflationary pressures and a need for sustained higher interest rates, has likely left Asian investors on edge," SPI Asset Management analyst Stephen Innes commented.
In Tokyo, the Nikkei 225 was down 0.6% in late dealings. In China, the Shanghai Composite was 1.0% higher, though the Hang Seng in Hong Kong fell 0.5%. The S&P/ASX 200 traded 0.1% higher in Sydney.
Against the dollar, sterling fell to USD1.2418 early Wednesday, from USD1.2435 at the time of the London equities close on Tuesday. The euro faded to USD1.0615 from USD1.0629. Against the yen, the buck bought JPY154.66, rising from JPY154.51. The dollar spiked as high as around JPY154.78 on Tuesday.
The UK annual consumer price inflation rate is expected to have cooled to 3.1% in March, from 3.4% in February, edging closer to the Bank of England's 2% target.
"So far, there is no evidence that inflation will take the decisive final step, i.e. [a] move from the recently observed monthly rates of just below 0.3% towards below 0.2%. Such a rate would be more in line with the inflation target of 2% than the rates currently observed. Although the core rate is likely to fall towards 3-3.5% year-on-year in the coming months, the data do not suggest much more at the moment. And until that changes, the market is likely to remain cautious on rate cut expectations and tend to follow the Fed's lead. Therefore, we remain cautiously optimistic on the pound unless there are signs of a turnaround today," Commerzbank analyst Michael Pfister commented.
A barrel of Brent oil fell to USD89.50 early Wednesday, from USD90.21 at the European equities close Tuesday. Gold traded at USD2,377.12 an ounce, rising from USD2,379.66.
Still to come on Wednesday's economic calendar is a eurozone inflation reading at 1000 BST.
The local corporate calendar has a trading statement from asset manager Liontrust, bookmaker Entain and miner Antofagasta.
Already out, Rio Tinto reiterated its annual production guidance, despite seeing lower quarterly iron ore shipments and production.
The Anglo-Australian mining and metals company said that first-quarter iron ore production from the Pilbara assets in Western Australia fell 2% year-on-year to 77.9 million tonnes, and was 11% behind the final quarter of 2023.
Pilbara iron ore shipments dropped 5% on-year to 78.0 million tonnes, and were 10% behind the fourth quarter.
By Eric Cunha, Alliance News news editor
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