LONDON MARKET EARLY CALL: FTSE 100 seen lower ahead of rate calls

(Alliance News) - Stocks in London are set to open slightly lower on Wednesday, as investors remain cautious and ahead of two central bank rate decisions on Wednesday.

IG says futures indicate the FTSE 100 to open 9.8 points lower, 0.1%, at 10,322.99 on Wednesday. The index of London large-caps closed 0.1% higher at 10,332.79 on Tuesday.

Sterling was quoted at USD1.3508 early Wednesday, edging up from USD1.3505 at the London equities close on Tuesday. Against the euro, sterling fell to EUR1.1543 from EUR1.3505 a day prior.

The euro traded at USD1.1703 early Wednesday, lower than USD1.1709 late Tuesday. Against the yen, the dollar was quoted at JPY159.67 versus JPY159.61.

US President Donald Trump and the UK's King Charles III hailed their countries' longstanding ties at a White House state dinner, despite Trump claiming the monarch agreed with him on Iran's nuclear ambitions.

Charles echoed the tone of his earlier speech to Congress, urging London and Washington to stand together, without directly addressing tensions over the US-Israeli war with Tehran.

"We have militarily defeated that particular opponent," Trump said at the dinner. "Charles agrees with me even more than I do – we're never going to let that opponent have a nuclear weapon."

Brent oil was trading at USD104.46 a barrel early Wednesday, lower than USD111.77 late Tuesday.

In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.1%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.9%.

Attention now turns to central banks, with the US Federal Reserve due to announce its interest rate decision at 1900 BST, where the consensus expects a hold at 3.75%.

The Bank of Canada is also set to deliver its rate decision at 1445 BST, with markets likewise anticipating no change from the current 2.25%.

Meanwhile, US petrol prices have climbed to their highest level since the start of the war with Iran, with no peace deal in sight, according to the American Automobile Association.

Americans paid an average of USD4.18 per gallon, or 3.785 litres, on Tuesday, a level last seen around four years ago following the start of Russia's war in Ukraine.

At the onset of the Iran conflict in late February, the average stood at USD2.98 per gallon, meaning prices have surged by around 40%. The rise is also linked to Iran's blockade of the Strait of Hormuz, a critical route for global oil trade.

In Asia, the Shanghai Composite in China was up 0.6%, while the Hang Seng index in Hong Kong was up 1.5%. The Nikkei 225 index in Tokyo was closed for Showa Day.

The S&P/ASX 200 in Sydney was down 0.3%, as data showed inflationary pressures picking up.

According to the Australian Bureau of Statistics, consumer price inflation accelerated to 4.6% year-on-year in March from 3.7% in February, albeit slightly below the FXStreet-cited consensus forecast of 4.7%. Housing costs rose 6.5%, transport climbed 8.9%, and food and non-alcoholic beverages increased 3.1%.

Trimmed mean inflation, which excludes volatile items, held steady at 3.3% on-year.

Gold was quoted at USD4,596.819 an ounce early Wednesday, higher than USD4,579.32 on Tuesday.

Back in the UK, the economic outlook is also under pressure.

The Middle East energy shock could wipe around GBP35 billion from the UK economy over the next two years in a "best-case" scenario, according to the National Institute of Economic and Social Research.

The think tank warned that a prolonged crisis could push the UK into recession in the second half of the year, with slower growth and rising inflation expected. It also suggested that the Bank of England may be forced to raise interest rates this summer, with as many as six additional hikes possible in a more severe scenario.

In Wednesday's corporate calendar, it is a busy day for corporate updates in London, with AstraZeneca, Aston Martin, GSK and Lloyds Banking reporting first-quarter results, while JD Wetherspoon and Jet2 are among those issuing trading statements.

In the economic calendar on Wednesday, Spain releases CPI data, while the eurozone publishes its economic sentiment and industrial sentiment indices. Ireland also reports harmonised CPI, GDP and retail sales, alongside Germany's CPI reading.

In the US, attention turns to wholesale inventories, durable goods orders and building permits.

By Eva Castanedo, Alliance News reporter

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