(Alliance News) - Stocks in London are set to open lower on Wednesday amid a number of virus flare ups and US lawmakers failing to make headway on further stimulus ahead of the US Federal Reserve's latest rate decision.
IG says futures indicate the FTSE 100 index of large-caps to open 20.16 points lower at 6,109.10 on Wednesday. The FTSE 100 index closed up 24.38 points, or 0.4%, at 6,129.26 on Tuesday.
"A resurgence of Covid-19 cases in Xinjiang in China, Hong Kong, and Australia, as well as spikes in Spain and Belgium, along with other localised outbreaks across Europe has prompted concerns about a second wave, and thus jeopardising further lockdown relaxation measures as we head into August," said Michael Hewson, chief market analyst at CMC Markets.
He continued: "It is against this backdrop that today's latest Fed meeting is set to take place with no changes in policy expected, however the virus outlook looks a lot different at this meeting than when the FOMC last met" in early June.
The Federal Open Market Committee will announce its latest policy decision at 1900 BST. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 BST.
The federal funds rate is currently 0.00% to 0.25%. The CME's FedWatch tool has it fully priced in that the Fed stands pat on rates this week.
The Fed meeting comes as coronavirus deaths in the US surged to their highest level in months.
The human toll of the disease surged to a level not seen since mid-May in the US, the world's hardest-hit country, with nearly 1,600 deaths recorded in 24 hours, Johns Hopkins University reported on Tuesday. Case numbers have been rising for weeks across swathes of the nation, leaving health authorities and leaders to watch nervously for a feared spike in fatalities.
The US is not the only country to see a flare up in infections. China reported 101 new coronavirus cases Wednesday, its highest single-day figure in three months, as gyms, bars and museums closed in infection hotspots.
Of the new cases, 98 were domestic infections, mostly in the northwestern region of Xinjiang, where a growing cluster first discovered earlier this month has prompted mass testing and restrictions.
In Europe, resurgent virus cases are blasting a similar hole in local hopes for a financial windfall in summer holiday hotspots. Spain, one of the countries hit hardest by the pandemic, insists it is a safe destination for tourists despite tackling 361 active outbreaks and more than 4,000 new cases.
Iran suffered its worst day yet of the pandemic, reporting 235 new deaths on Tuesday, a record toll for a single day in the Middle East's hardest-hit country.
In the US on Tuesday, Wall Street ended lower. The Dow Jones Industrial Average closed down 205.49 points, or 0.8%, at 26,379.28.
The S&P 500 closed down 20.97 points, or 0.7%, at 3,218.44 and the Nasdaq Composite ended down 134.18 points, or 1.3% at 10,402.09.
Democrats and Republicans in the US Congress late Tuesday were far from reaching an agreement on a new package to support the world's leading economy, brought to its knees by the virus pandemic.
"Very sadly, after months of deadly delay, the Republicans have unveiled a proposal that would only prolong the suffering for millions of workers and families across America," House Speaker Nancy Pelosi wrote in letter to her fellow Democrats, following two rounds of negotiations with the White House and Republican lawmakers.
In the Senate, Republican majority leader Mitch McConnell defended his party's proposal, unveiled on Monday, that calls for USD1 trillion in stimulus aid. Back in May, the House Democrats unveiled a USD3 trillion coronavirus response package, the largest yet, to fund efforts to fight the pandemic and provide emergency payments to millions of Americans.
Stumbling blocks to reaching an agreement include extending aid to the millions left jobless by the pandemic. Under the Republican plan, unemployment payments would drop to USD200 a week, compared to USD600 per week under the current plan â€“ set to expire at the end of July.
The currency market was muted early Wednesday. Sterling was quoted at USD1.2921 early Wednesday, soft on USD1.2930 at the London equities close on Tuesday.
The euro traded at USD1.1729 early Wednesday, flat versus USD1.1731 late Tuesday. Against the yen, the dollar was quoted at JPY105.06, flat against JPY105.10.
In Asia on Wednesday, the Japanese Nikkei 225 index is down 2.2%. In China, the Shanghai Composite is up 1.5%, while the Hang Seng index in Hong Kong is up 0.1%. Â
Gold was quoted at USD1,952.60 an ounce early Wednesday, flat on USD1,953.15 on Tuesday. Brent oil was trading at USD43.23 a barrel early Wednesday, higher than USD43.09 late Tuesday.
The economic events calendar on Wednesday has Germany import and export prices at 0700 BST and UK mortgage approvals at 0930 BST.
The UK corporate calendar on Wednesday has interim results from drugmaker GlaxoSmithKline, lender Barclays, miner Rio Tinto, housebuilder Taylor Wimpey and from luxury carmaker Aston Martin Lagonda.
By Lucy Heming; firstname.lastname@example.org
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