(Alliance News) - Stocks in London are set for a recovery on Tuesday after a lacklustre start to the week, with focus in the morning on some key UK unemployment data, after UK Prime Minister Boris Johnson laid out his roadmap to exit lockdown in England.
IG says futures indicate the FTSE 100 index of large-caps to open 25.86 poitns higher, or up 0.4%, at 6,638.10 on Tuesday. The FTSE 100 closed down 11.78 points, or 0.2%, at 6,612.24 on Monday.
"Today's European open is likely to see a little bit of a rebound after the declines from yesterday, helped by a positive Asia session, and while optimism abounds about an economic recovery, there still seems to be an abundance of caution about when to look at becoming strongly positive about the prospects for UK and European stocks," said Michael Hewson at CMC Markets.
"Fresh from the optimism about an economic reopening roadmap for the UK economy, we get the latest ILO measure of unemployment for December, which is expected to show another modest uptick from the 5% level seen in November, and move up to 5.1% for the first time since March 2016, before the Brexit referendum."
Johnson said spring and summer in England will usher in changes to make lives "incomparably better", as he set out a plan to fully ease the lockdown by June 21.
The prime minister defended his "cautious but also irreversible" approach to relaxing restrictions with a four-step plan on Monday, arguing he will not be "buccaneering" with people's lives. But despite billing his plans as a "one-way road to freedom", he admitted he cannot guarantee that the vaccination programme will prevent restrictions from ever returning.
Chancellor Rishi Sunak is under pressure to extend measures such as the furlough scheme, which is due to expire at the end of April, when he delivers his government budget on March 3.
CMC's Hewson noted: "Projections for unemployment are set to rise to 7.5% by the summer, especially if furlough isn't extended beyond the current deadline of April in the budget next week."
The UK unemployment figures are due at 0700 GMT. Also in the economic calendar on Tuesday is eurozone inflation at 1000 GMT.
The pound was holding firm above the USD1.40 mark ahead of the UK jobs data. Sterling was quoted at USD1.4066 early Tuesday compared to USD1.4060 at the London equities close on Monday.
The euro traded at USD1.2168 early Tuesday, edging up from USD1.2145 late Monday. Against the yen, the dollar was quoted at JPY105.09 versus JPY105.07.
In the US on Monday, Wall Street ended mostly lower, with the Dow Jones Industrial Average ending up 0.1%, the S&P 500 down 0.8% and Nasdaq Composite closing 2.5% lower.
In Japan, financial markets are shut for the Emperor's Birthday holiday.
In China, the Shanghai Composite is down 0.3%, while the Hang Seng index in Hong Kong is up 1.0%.
Shares in HSBC were up 1.0% in Hong Kong after the bank reported a sharp drop in profit in 2020 but offered some "cautious optimism" going forward.
For 2020, the China-focused lender saw its pretax profit drop to USD8.78 billion from USD13.35 billion in 2019. The 34% fall was blamed on higher expected credit losses and other credit impairment charges and lower revenue. Despite the sharp drop, HSBC's pretax profit came in ahead of market consensus, which forecast the figure at USD8.33 billion.
Net operating income plunged 21% to USD41.55 billion from USD52.31 billion, as net interest income fell 9.5% to USD27.58 billion from USD30.46 billion and net fee income slipped 1.2% to USD11.87 billion from UDS12.02 billion. Market consensus had forecast net operating income at USD50.04 billion, while net interest income was predicted at USD27.23 billion.
Looking ahead, HSBC said it recognises a number of "fundamental changes", including the prospect of prolonged low interest rates, the significant increase in digital engagement from customers, and the enhanced focus on the environment. As a result, the lender said it has "aligned its strategy accordingly".
The bank noted it had a "good start" to 2021, and is "cautiously optimistic" for the year ahead.
The UK corporate calendar still to come on Tuesday has annual results from InterContinental Hotels Group.
Gold was quoted at USD1,813.65 an ounce early Tuesday, a touch higher from USD1,810.01 on Monday. Brent oil was trading at USD66.27 a barrel, higher than USD64.45 late Monday and trading above the USD66 mark for the first time in over a year.
"The positive momentum continues in the oil complex, with investors unabashedly predisposed to a bullish view. So, the unwinding of the Texas cold snap effect and the prospects of some delicate negotiation ahead of the next OPEC+ meetings in early March are imparting little influence on price and giving way to the anticipated commodity reflation effect of Democrats pushing Biden's USD1.9 trillion stimulus through reconciliation and positive vaccine headlines," said Stephen Innes, chief global markets strategist at Axi.
By Lucy Heming; lucyheming@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
HSBC Holdings (HSBA)