(Alliance News) - Stocks in London were set to open higher on Tuesday, amid a bit more calm about the banking sector and as investors looked ahead to the US central bank's next interest rate decision on Wednesday.
IG says futures indicate the FTSE 100 index of large-caps to open up 23.25 points, 0.3%, at 7,427.1 on Tuesday.
The FTSE 100 index closed up 68.45 points, 0.9%, at 7,403.85 on Monday, as the buyout of Credit Suisse by UBS somewhat soothed worries of a full-blown banking crisis.
Focus over the next two days will be on the US Federal Open Market Committee, which begins its two day policy-setting meeting on Tuesday and will announce its next interest rate decision on Wednesday at 1800 GMT.
"Markets have become increasingly divided as to what the FOMC may well do when it comes to interest rates tomorrow, with opinions split between another 25bps hike, a pause, and a 25bps rate cut," said Michael Hewson, chief market analyst at CMC Markets.
"Assuming recent gains hold, and we get no further surprises then the odds still favour a 25bps rate rise, otherwise, the Fed runs the risk that it sends the message it is more concerned about financial stability than it is about its fight against inflation. A rate cut would send an even worse message that the Fed sees something the market doesn't and could spook already jittery markets even further."
According to the CME FedWatch tool, markets believe there is a 78% chance the Federal Reserve will lift US interest rates by 25 basis points on Wednesday, with the remaining 22% expecting rates to stay at their current level. Earlier this month, before the recent banking industry turmoil, a 50-point hike was considered possible.
The dollar was stronger ahead of the start of the FOMC meeting.
Sterling was quoted at USD1.2247 early Tuesday, lower than USD1.2270 at the London equities close on Monday. The euro traded at USD1.0706, lower than USD1.0723. Against the yen, the dollar was quoted at JPY131.51, firm on JPY131.47.
New York ended higher on Monday, with the Dow Jones Industrial Average up 1.2%, the S&P 500 up 0.9% and the Nasdaq Composite up 0.4%.
Tokyo was closed on Tuesday for the Vernal Equinox holiday. In Sydney, the S&P/ASX 200 closed up 0.8%.
The Shanghai Composite was up 0.6% on Tuesday, while the Hang Seng index in Hong Kong was up 0.9%.
Gold was quoted at USD1,972.12 an ounce early Tuesday in London, lower than USD1,977.65 late on Monday. Brent oil was trading at USD72.93 a barrel, higher than USD72.31.
In Tuesday's UK corporate calendar, there are full-year results from Kingfisher and Trustpilot, half-year results from YouGov, and a trading statement from Ocado.
In the economic calendar, UK Chancellor Jeremy Hunt will take questions from members of Parliament at 1130 GMT.
By Heather Rydings, Alliance News senior economics reporter
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