Stocks called higher amid US brinkmanship

(Alliance News) - Stocks in London are set to open higher on Tuesday, as UK markets reopen after a long bank holiday weekend for the coronation of King Charles III and ahead of a key political meeting to head off a US debt default.

IG says futures indicate the FTSE 100 index of large-caps to open up 25.62 points , or 0.3%, at 7,804.00 on Tuesday. The FTSE 100 index closed up 75.74 points, or 1.0% at 7,778.38 on Friday.

Sterling was quoted at USD1.2615 early Tuesday, lower than USD1.2628 at the London equities close on Friday.

Numbers on Tuesday showed that UK retail sales increased last month, though there were more signs of consumers being hurt by inflationary pressure.

According to the British Retail Consortium, sales rose 5.1% on-year in April. This compares to a 0.3% fall a year prior and is in line with the average growth rate over the past three months.

On a like-for-like basis, sales increased 5.2% year-on-year last month, topping the three-month average rise of 5.0%. In April 2022, sales had fallen 1.7% year-on-year on a like-for-like basis.

Over the three months to April, food sales increased 9.8% and non-food sales rose 1.2%.

BRC Chief Executive Helen Dickinson said: "While retail sales grew in April, overall inflation meant volumes were down for both food and non-food as customers continued to adjust spending habits. Clothing sales underperformed as the poor weather left customers thinking twice before decking out their summer wardrobe. Meanwhile, a boost to overseas tourism over Easter helped jewellery, watches and cosmetics."

Across the Atlantic, US President Joe Biden will convene a high-stakes meeting with Republican leaders on Tuesday in hopes of breaking an impasse over the US debt limit – with repercussions that could extend to next year's presidential election.

The White House gathering involves Biden, House Speaker Kevin McCarthy and Senate Republican leader Mitch McConnell, setting in motion the deciding round of a power struggle that also threatens massive consequences for the world's largest economy.

The lifting of the national debt ceiling, which allows the government to pay for spending already incurred, is often routine. But raising the borrowing limit, currently at USD31.4 trillion, has been a contentious issue for the past several years, with congressional Republicans pushing for spending curbs and a smaller budget deficit in exchange for lifting the ceiling.

Shares in New York ended mixed on Monday, with the Dow Jones Industrial Average down 0.2%, the S&P 500 closed flat, and the Nasdaq Composite up 0.2%.

The euro traded at USD1.0991 early Tuesday, lower than USD1.1016 late Friday.

European stocks were mixed on Monday. The DAX 40 in Frankfurt closed down 0.1%, while the CAC 40 in Paris closed up 0.1%.

Against the yen, the dollar was quoted at JPY134.90 early Tuesday in London, slightly higher versus JPY134.88.

In Tokyo on Tuesday, the Nikkei 225 index was up 1.1%. In China, the Shanghai Composite was up 0.2%, while the Hang Seng index in Hong Kong was down 0.6%. The S&P/ASX 200 in Sydney closed down 0.2%.

Gold was quoted at USD2,027.72 an ounce early Tuesday in London, higher than USD2,013.19 late on Friday. Brent oil was trading at USD76.51 a barrel, lower than USD74.94.

In Tuesday's UK corporate calendar, there are full-year results from Tialis Essential IT and half-year results from Treatt.

In the economic calendar on Tuesday, there is the UK Halifax house price index, as well as industrial production data for Ireland.

Later this week, on Thursday at midday, the Bank of England will announce its latest interest rate decision.

By Sophie Rose, Alliance News reporter

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