Positive open seen as US debt deadline looms

(Alliance News) - Stocks in London were set to edge slightly higher on Tuesday, as markets in the UK and US reopen after a long holiday weekend.

IG says futures indicate the FTSE 100 index of large-caps to open up 5.3 points at 7,632.5 on Tuesday. The FTSE 100 index closed up 56.33 points, or 0.7% at 7,627.20 on Friday, but finished the week 1.7% lower.

Republican and Democratic leaders scrambled to secure congressional support for a bill aimed at avoiding a catastrophic US debt default – with just one week left before the government starts running out of money.

The bill, finalized on Sunday by US President Joe Biden and House Speaker Kevin McCarthy after weeks of frantic negotiations, faces opposition from the progressive and hard-right wings of their respective parties.

Ultra-conservative Republicans feel McCarthy should have secured far deeper spending cuts in exchange for raising the debt ceiling and allowing the government to keep borrowing money. The left wing of the Democratic Party is equally unhappy that Biden agreed to any spending limits at all.

In the UK, shop price inflation accelerated in May to a new peak, although food price inflation decelerated despite remaining at an elevated level.

According to the latest British Retail Consortium-NielsenIQ tracker, shop price inflation increased to 9.0% in May, on an annual basis, up slightly from 8.8% in April. This is above the three-month average rate of 8.9% and takes shop price growth to a fresh high.

Food inflation decelerated to 15.4% in May from 15.7% in April.

Sterling was quoted at USD1.2337 early Tuesday, higher than USD1.2325 at the London equities close on Friday.

The euro traded at USD1.0688 early Tuesday, lower than USD1.0703 late Friday. Against the yen, the dollar was quoted at JPY140.57, down versus JPY140.65.

Wall Street ended higher on Friday ahead of the Memorial Day weekend. The Dow Jones Industrial Average closed up 1.0%, the S&P 500 up 1.3% and the Nasdaq Composite up 2.2%.

In Asia on Tuesday, Tokyo's Nikkei 225 index was up 0.3%. In China, the Shanghai Composite was down 0.6%, while the Hang Seng index in Hong Kong was down 0.4%. The S&P/ASX 200 in Sydney closed down 0.2%.

Gold was quoted at USD1,933.31 an ounce early Tuesday, lower than USD1,939.81 on Friday. Brent oil was trading at USD76.34 a barrel early Tuesday, lower than USD76.63 late Friday.

In this week's economic calendar, there is a US consumer confidence reading on Tuesday, before the latest nonfarm payrolls data on Friday. Minutes from the European Central Bank's most recent meeting are released on Thursday.

By Sophie Rose, Alliance News reporter

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