Stocks to open flat after Wall Street gains

(Alliance News) - Stocks in London are set to open flat on Tuesday, as investors looked at the latest interest rate decision from Japan and developments in the Middle East.

IG says futures indicate the FTSE 100 to open up 0.3 of a point at 7,614.78 on Tuesday. The index of London large-caps closed up 38.12 points, 0.5%, at 7,614.48 on Monday.

"We saw a negative start to the week for European markets yesterday, as we head towards the last few trading days before Christmas with the FTSE 100 managing to buck the negative trend largely due to a rebound in the energy sector and a strong performance from telecoms," said CMC Markets' Michael Hewson.

The dollar lost ground against the pound and the euro, as investors shrugged off hawkish comments from the Federal Reserve and bet on rate cuts. Sterling was quoted at USD1.2658 early Tuesday, higher than USD1.2640 at the London equities close on Monday. The euro traded at USD1.0928, rising from USD1.0914.

In the US on Monday, Wall Street ended mostly higher, with the Dow Jones Industrial Average little changed, the S&P 500 up 0.5% and the Nasdaq Composite up 0.6%.

However, the greenback made gains against the yen, after the Bank of Japan maintained its long-standing, ultra-loose monetary policy. Against the yen, the dollar was quoted at JPY143.51, up versus JPY143.05.

The BoJ offered no guidance on its plans in the new year. Speculation had been swirling for weeks that officials would shift away from negative interest rates and tight grip on bond yields as inflation picks up.

After a two-day meeting, the bank said on Tuesday: "With extremely high uncertainties surrounding economies and financial markets at home and abroad, the Bank will patiently continue with monetary easing."

In Asia on Tuesday, the Nikkei 225 index in Tokyo closed up 1.4%. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was down 1.0%. The S&P/ASX 200 in Sydney closed up 0.8%.

Meanwhile, oil prices mostly held onto their gains overnight, having advanced on Monday amid disruption in the Middle East. Brent oil was trading at USD78.07 a barrel early Tuesday, edging down from USD78.52 late Monday.

Iran-backed Huthi rebels have escalated attacks on tankers, cargo ships and other vessels in the Red Sea, imperiling a transit route that carries up to 12% of global trade. This prompted companies, including BP, to suspend transits through the area.

The US announced a 10-nation coalition to quell Huthi missile and drone attacks on ships transiting the Red Sea, with Britain, France, Bahrain and Italy among countries joining the "multinational security initiative".

Gold was quoted at USD2,024.50 an ounce early Tuesday, a touch higher than USD2,022.88 on Monday.

In Tuesday's corporate calendar, there will be half year results from Hipgnosis Songs Fund. There is a trading statement from Nanoco.

In the economic calendar, there is a consumer price index for the eurozone at 1000 GMT.

By Elizabeth Winter, Alliance News deputy news editor

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