(Alliance News) - London equities are set to open slightly higher on Tuesday, following rallies in New York and Tokyo and ahead of PMI readings for many of the world's major economies.
IG says futures indicate the FTSE 100 index of large-caps to open up 11.7 points, 0.2%, at 7,796.37 on Tuesday. The FTSE 100 index closed up 14.08 points, or 0.2% at 7,784.67 on Monday.
"While US markets surged higher yesterday it is notable that today's European market open is likely to be a much more tepid affair, suggesting perhaps that investors in Europe don't share the same enthusiasm about the economic outlook, despite the reopening of the Chinese economy, which may help to provide a demand boost," said CMC Markets' Michael Hewson.
Wall Street ended higher on Monday, with the Dow Jones Industrial Average up 0.8%, the S&P 500 up 1.2% and the tech-heavy Nasdaq Composite up 2.0%.
"The outperformance in tech appears to point to a growing conviction on the part of investors that the Fed will soon have to look at cutting rates before the end of the year, although to look at bond markets yesterday, yields also moved higher, as money flowed out of treasury markets," said Hewson.
The dollar was trading lower early Tuesday in London.
Sterling was quoted at USD1.2394, higher than USD1.2368 at the London equities close on Monday. The euro traded at USD1.0882, up from USD1.0870. Against the yen, the dollar was quoted at JPY130.12, down from JPY130.62.
In Tokyo on Tuesday, the Nikkei 225 index rose 1.5%, as preliminary survey results showed the Japanese private sector returned to growth in January.
The latest au Jibun Bank services purchasing managers' index rose to 52.4 points in January from 51.1 the month before, according to the flash reading.
The services score lifted the flash composite PMI to 50.8 in January, from 49.7 in December. Crossing above the 50.0 no-change mark, it shows Japan's private sector has returned to marginal growth from last month's slight contraction.
The manufacturing sector remained in contraction. The output index edged up to 47.1 points from 46.6.
"Similar to trends recorded over much of the past six months, a divergence between the manufacturing and services sectors has remained. While manufacturing firms continued to face muted customer demand, service providers made sustained gains from the travel subsidy programme and recent relaxation of Covid measures," said Laura Denman, economist at S&P Global Market Intelligence
Meanwhile, markets in Shanghai and Hong Kong remained closed to mark Lunar New Year.
The S&P/ASX 200 index in Sydney closed up 0.4%.
Gold was quoted at USD1,936.89 an ounce early Tuesday, higher than USD1,922.40 late Monday. Brent oil was trading at USD88.93 a barrel, little changed from USD88.82.
In Tuesday's UK corporate calendar, there are trading statements from Primark-owner Associated British Foods and construction firm Henry Boot.
In the economic calendar, there are a slew of flash PMI releases from EU, UK, Germany and US.
"In the UK, manufacturing has struggled over the past 3 months and looks set to continue to do so, while services have been slightly more resilient. As we head into 2023 the challenges for business will be whether we see new investment, and a pick-up in economic activity, after the rising pessimism seen at the end of last year. Manufacturing is expected to remain subdued at 45.5, while services could slip back from 49.9 to 49.5," CMC's Hewson said.
By Elizabeth Winter, Alliance News senior markets reporter
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