LONDON MARKET EARLY CALL: FTSE 100 called lower; UK inflation ahead

(Alliance News) - London's FTSE 100 is to open in the red on Wednesday, as geopolitical uncertainty continues to loom large, while in the UK eyes will be on a consumer price inflation reading following softer-than-expected jobs data.

Over in New York, meanwhile, Nvidia takes centre-stage.

IG says futures indicate the FTSE 100 to open 58.8 points lower, 0.6%, at 10,271.75 on Wednesday. The index of London large-caps edged up 6.80 points, 0.1% at 10,330.55 on Tuesday.

President Donald Trump warned Tuesday that the US may strike Iran again, a day after he said he had held off a major assault in hope of a deal to end the war – but Tehran's army threatened to open "new fronts" if he went ahead.

Trump told reporters at the White House that he had been just "an hour away" from relaunching Washington's attacks on Iran before postponing the order, after weeks of a fragile ceasefire and talks to end the war that began on February 28.

"You know how it is to negotiate with a country where you're beating them badly. They come to the table, they're begging to make a deal," he said.

"I hope we don't have to do the war, but we may have to give them another big hit. I'm not sure yet."

But Iran's army spokesman Mohammad Akraminia earlier warned the Islamic republic would "open new fronts against" the US if it restarted its attacks.

Swissquote analyst Ipek Ozkardeskaya commented: "Alas, geopolitical uncertainties continue. Traffic through the Strait of Hormuz remains at a near standstill, world oil inventories continue tightening, and oil prices keep rising. The latter fuels global inflation expectations and pushes global yields higher on rising bets that central banks may have to fight price pressures despite the worsening economic outlook."

The yield on the US 10-year Treasury narrowed to 4.66% on Wednesday morning, from 4.68% at the time of the London equities close on Tuesday. The 30-year yield was steady at 5.18%.

A barrel of Brent was largely unchanged at USD110.68, from USD110.72. Gold ebbed to USD4,475.81 an ounce from USD4,502.96.

In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.7% and the Nasdaq Composite down 0.8%.

Ozkardeskaya continued: "All eyes on Nvidia.

"Expectations are, of course, sky high. The company is expected to report around USD79 billion in revenue — roughly 15% higher than last quarter and nearly 80% above the same quarter last year. Margins are also expected to remain exceptionally strong, around 75%, confirming that Nvidia still enjoys enormous pricing power despite the massive Blackwell ramp and rising competition."

Sterling fell slightly to USD1.3392 on Wednesday from USD1.3396 on Tuesday. Against the euro, it declined to EUR1.1544 from EUR1.1549.

The euro was largely steady at USD1.1596 from USD1.1598. Against the yen, the dollar fell to JPY158.94 from JPY159.14.

Wednesday's global economic calendar has eurozone inflation data at 1000 BST before minutes of the April Federal Open Market Committee meeting at 1900.

UK inflation data is released at 0700. According to consensus cited by FXStreet, the pace of annual consumer price inflation is expected to have eased to 3.0% in April from 3.3% in March.

The Office for National Statistics said Tuesday that the unemployment rate rose back to 5.0% in the three months to March, from 4.9% in the period to February. According to consensus cited by FXStreet, it had been expected to stay at 4.9%.

"With a weaker labour market, distorted inflation and potentially declining leading indicators, the Bank of England is not exactly in an enviable position. There have been increasing suggestions recently that policymakers will discuss a rate hike much more intensively in June. However, even if it does raise rates, it is likely to leave it at that for now. After all, the real economy is in a very different situation to that of four years ago. We therefore remain sceptical about market expectations of more than two rate hikes by the end of the year, as well as about the pound," Commerzbank analyst Michael Pfister commented.

In Tokyo on Wednesday, the Nikkei 225 was down 1.7% in late trade, as tech shares struggled. SoftBank was 6.3% lower, while optical fibres maker Fujikura was down 8.4%.

The Shanghai Composite was down 0.3%, while the Hang Seng Index fell 0.7%, struggling with a rotation out of tech, as Tencent was 1.2% lower, Baidu shed 1.9% and Xiaomi declined 2.2%.

In Sydney, the S&P/ASX 200 was down 1.3%.

Wednesday's local corporate calendar has full-year results from retailer Marks & Spencer, property investor British Land, and water utility Severn Trent.

By Eric Cunha, Alliance News news editor

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