(Alliance News) - London's FTSE 100 is called to open a touch lower on Wednesday, returning some of Tuesday's climb, while the pound is up slightly.

Those moves could reverse, however, if data at 0700 BST shows the UK inflation rate returned to target last month.

Away from the UK data, Wednesday could be a day for thin trading volumes, with markets in New York closed for a public holiday.

IG says futures indicate the FTSE 100 to open 9.3 points lower, 0.1%, at 8,181.99 on Wednesday. The index of London large-caps closed up 49.14 points, 0.6%, at 8,191.29 on Tuesday.

The pound was quoted at USD1.2707 early Wednesday, rising from USD1.2693 at the time of the London equities close Tuesday. The euro stood at USD1.0736, unmoved from late Tuesday. Against the yen, the dollar was trading at JPY157.84, down from JPY157.97.

"The UK has May inflation numbers, which will help feed the debate on the timing for any Bank of England rate cuts this summer," ING analysts noted.

According to FXStreet cited consensus, the UK yearly consumer price inflation rate is expected to have ebbed to 2.0% in May, from 2.3% in April.

It would represent the first time since July 2021 that the rate of inflation of the UK has been in line with the Bank of England's target. The rate of inflation stood as high as 11.1% in October, but has faded, albeit in a bumpy fashion, since then.

The reading will give the BoE some food for thought, ahead of Threadneedle Street's interest rate decision at midday on Thursday. No change to bank rate, currently at a 16-year high of 5.25%, is expected. However, an in-line, or even cooler, inflation reading could open the door for a summer rate cut.

The central bank's next decision following Thursday's is on August 1. Unlike June's rate call, August's decision will be accompanied by the latest monetary policy report with economic projections, as well as a press conference with Governor Andrew Bailey.

Elsewhere, Wednesday's economic calendar has eurozone construction output data at 1000 BST.

In Asia on Wednesday, shares were largely lower. The Shanghai Composite was down 0.4% in afternoon dealings, though the Hang Seng in Hong Kong shot up 2.2%, looking set to snap a three-day losing streak. Tokyo's Nikkei 225 was down marginally, and over in Sydney, the S&P/ASX 200 was 0.3% lower.

The head of China's central bank said on Wednesday that the economy still faced many challenges, but warned authorities would not resort to huge stimulus measures and instead exercise moderation.

Central bank chief Pan Gongsheng told a financial forum in Shanghai that the economy was struggling with "insufficient effective demand, insufficiently smooth domestic circulation, and a marked rise in the complexity, severity and uncertainty of the external environment".

But he said authorities would "avoid major easing or tightening".

In New York on Tuesday, the Dow Jones Industrial Average rose 0.2%, the S&P 500 added 0.3% and the Nasdaq Composite closed marginally higher.

US-based chip manufacturer Nvidia reached a milestone on Tuesday as the most valuable company on the stock market, driven by growing demand for artificial intelligence technology.

Nvidia's market capitalization hit USD3.33 trillion, surpassing software firm Microsoft. The shares of Nvidia finished 3.5% higher on Tuesday, while Microsoft's shares saw a slight drop.

Nvidia's chips have become a key technology for the future of AI. The chips are ideal for computing work, particularly in training AI software in data centres.

The only other publicly listed company with a market capitalization above the USD3 trillion mark is Apple, whose stock price surged last week after it announced new AI features.

Brent oil was quoted at USD85.35 a barrel early Wednesday, rising from USD85.02 late Tuesday. Gold was quoted at USD2,328.54 an ounce, up from USD2,324.20.

In Wednesday's UK corporate calendar, there are full year results from housebuilder Berkeley Group.

By Eric Cunha, Alliance News news editor

Comments and questions to newsroom@alliancenews.com

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