FTSE to head lower with eyes on US data

(Alliance News) - Stocks in London are set to open in the red on Tuesday, after Wall Street indices pulled back slightly ahead of key US data.

IG says futures indicate the FTSE 100 to open down 13.3 points, 0.2%, at 7,671.00 on Tuesday. The index of London large-caps closed down 21.98 points, 0.3%, at 7,684.30 on Monday.

In the US on Monday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.2%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.1%.

"Investors were rebalancing their positions in US stocks, bonds, and the dollar overnight, leading to minor market movements. Traders were preparing for a deluge of economic data, focusing on the personal consumption expenditures deflator and comments from Federal Reserve speakers that could provide insights into the possibility of the [Federal Reserve]'s first rate cut," said Stephen Innes, managing partner at SPI Asset Management.

The monthly PCE data is reported on Thursday. According to FXStreet cited consensus, the headline annual PCE inflation rate is to ease to 2.4% in January, from 2.6% in December. The core reading, the Fed's preferred inflationary gauge, is to ebb to 2.8% from 2.9%.

Sterling was quoted at USD1.2682 early Tuesday, higher than USD1.2676 at the London equities close on Monday. The euro traded at USD1.0850, little changed from USD1.0849. Against the yen, the dollar was quoted at JPY150.49, down versus JPY150.81.

Meanwhile, UK shop price inflation ebbed to an almost two-year-low in February, according to the latest British Retail Consortium-NielsenIQ shop price index.

Annual shop price inflation ebbed to 2.5% in February, from 2.9% in January. The reading was also short of the three-month average inflation rate of 3.3%.

The non-food inflation rate was unmoved at 1.3% in February, below the 3-month average rate of 2.0%. Food price inflation eased to 5.0% in February, from 6.1% in January, below the three-month average rate of 6.0%.

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed marginally higher, as new data showed Japanese inflation slowed by less than expected. Consumer price inflation hit the Bank of Japan's 2.0% target in January, according to official data, helping to firm expectations of an end to its ultra-loose monetary policy.

Consumer prices rose 2.0% year-on-year in January, slowing from 2.3% in December - the third straight monthly easing. The January data "will support market speculation for an April rate hike", ING economists said, although inflation could still be "choppy" in coming months.

In China, the Shanghai Composite was up 1.0%, while the Hang Seng index in Hong Kong was up 0.1%. The S&P/ASX 200 in Sydney closed up 0.1%.

Gold was quoted at USD2,034.50 an ounce early Tuesday, higher than USD2,028.18 on Monday. Brent oil was trading at USD82.66 a barrel, rising slightly from USD82.18.

Tuesday's economic calendar has the latest US durable goods orders data at 1330 GMT, as well as a consumer confidence reading from the world's largest economy at 1500 GMT. There will be the latest Kantar supermarket sales and grocery inflation data at 0800 GMT.

In the UK company calendar, there are annual results from chemicals firm Croda International, student accommodation company Unite and medical devices maker Smith & Nephew.

By Elizabeth Winter, Alliance News deputy news editor

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