(Alliance News) – Stocks in London are set to open lower on Tuesday, amid worries about ‘higher for longer’ US interest rates.
IG says futures indicate the FTSE 100 to open down 28.72 points, 0.4%, at 7,482.00 on Tuesday. The index of London large-caps slumped 97.36 points, or 1.3% at 7,510.72 on Monday.
A stronger dollar and the prospect of a protracted period of high interest rates in the world’s largest economy soured sentiment in global equity markets.
The US Federal Reserve will likely need to keep interest rates higher for longer in order to firmly bring down inflation, a senior Fed official said.
“The most important question at this point is not whether an additional rate increase is needed this year or not, but rather how long we will need to hold rates at a sufficiently restrictive level to achieve our goals,” Fed Vice Chair for Supervision Michael Barr told a conference in New York in prepared remarks.
“I expect it will take some time,” he continued, adding that his decision would be guided by “a range of incoming data.”
The dollar was stronger against major currencies in early exchanges.
Sterling was quoted at USD1.2062 early Tuesday, lower than USD1.2143 at the London equities close on Monday. The euro was trading hands at USD1.0463, down from USD1.0508. Against the yen, the dollar was quoted at JPY149.89, rising slightly versus JPY149.78.
In Asia on Tuesday, the Nikkei 225 index in Tokyo was down 1.8%. In Shanghai, financial markets remained closed for Golden Week, while financial markets in Hong Kong reopened, with the Hang Seng index down 3.0%.
The S&P/ASX 200 in Sydney closed down 1.3%. The Reserve Bank of Australia decided to hold interest rates at 4.1% for the fourth meeting running, but said further monetary tightening may be required.
In the US on Monday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2%, the S&P 500 was little changed, while the Nasdaq Composite rose 0.7%
Gold was quoted at USD1,819.70 an ounce early Tuesday, lower than USD1,833.40 on Monday.
Brent oil was trading at USD89.71 a barrel, down from USD90.70.
“A stronger US dollar and the potential resumption of oil flows from Kurdistan drove this drop,” said SPI Asset Management’s Stephen Innes.
In Tuesday’s UK corporate calendar, there are half-year results from online clothing retailer Boohoo and Mexican restaurant chain Tortilla Mexican Grill, as well as a trading statement from bakery Greggs.
The economic calendar has the latest US job openings and labour turnover survey at 1500 BST.
By Elizabeth Winter, Alliance News senior markets reporter
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