(Alliance News) - Stocks in London are set to open lower on Wednesday after a bumper finish on Tuesday in the wake of dovish comments from US Federal Reserve officials.
IG says futures indicate the FTSE 100 to open 5.91 points lower, or 0.1%, at 7,622.30 on Wednesday. The index of London large-caps closed up 136.00 points, or 1.8%, at 7,628.21 on Tuesday.
Two senior Fed officials said on Monday that the US central bank should be careful when deciding whether or not to hike interest rates further to bring down inflation.
Dallas Fed President Lorie Logan said she would "carefully" evaluate economic and financial developments when deciding whether to back another rate hike.
Her rhetoric, along with that of Fed Vice Chair Philip Jefferson, lifted hope that interest rates in the world's largest economy may finally be hitting their peak.
Wall Street also ended higher on Tuesday as a result, with the Dow Jones Industrial Average up 0.4%, the S&P 500 up 0.5% and the Nasdaq Composite up 0.6%.
Further adding to Tuesday's positive mood, a senior official on the bank's rate-setting committee said the Fed is on track to tackle US inflation without pushing the country into a damaging recession.
"We feel like we're on track for a soft landing," Minneapolis Fed President Neel Kashkari told a conference in North Dakota, using a popular term to describe tackling inflation while avoiding a recession.
"Inflation has come down quite a bit, the labor market has remained strong, maybe we can get inflation all the way back down and avoiding (sic) a deep recession," he said.
In Tokyo on Wednesday, the Nikkei 225 index was up 0.7%. The S&P/ASX 200 in Sydney closed up 0.7%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was up 1.8%.
Bloomberg on Tuesday reported that China is mulling lifting its budget deficit, paving the way for a new round of stimulus.
Policymakers are considering USD137 billion worth of additional sovereign debt issues for infrastructure spending, Bloomberg reported.
Sterling was quoted at USD1.2292 early Wednesday, up from USD1.2270 at the London equities close on Tuesday. The euro traded at USD1.0605, virtually unchanged USD1.0606 late Tuesday. Against the yen, the dollar was quoted at JPY148.87, higher versus JPY148.74.
Gold was quoted at USD1,859.32 an ounce early Wednesday, slightly lower than USD1,859.73 at the London equities close on Tuesday. Brent oil was trading at USD87.99 a barrel, higher than USD87.50 late Tuesday.
In Wednesday's corporate calendar, there are trading statements from pub firm Marston's and electronics manufacturer discoverIE.
The economic calendar has a US producer price index reading at 1330 BST.
By Heather Rydings, Alliance News senior economics reporter
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