UK retail sales hold up better than expected

(Alliance News) - Stocks in London were set to open slightly higher on Tuesday, as investors look to the US for clues on the trajectory of its monetary policy.

IG says futures indicate the FTSE 100 index of large-caps to open up 10.0 points, 0.1%, at 7,939.79 on Tuesday. The FTSE 100 index closed down 17.32 points, 0.2%, at 7,929.79 on Monday.

In early economic news, UK retail sales held up better than expected in February as consumers proved they are still ready to celebrate events such as Valentine's Day despite the-cost-of living crisis.

Total UK retail sales were up 5.2% in February against an increase of 6.7% for the same month last year. The pace of growth was below the three-month average of 5.5% and above the 12-month average of 2.4%, according to the British Retail Consortium-KPMG Retail Sales Monitor.

Food sales increased by 8.3% over the three months to February and non-food sales were up 3.2%, while online non-food sales fell by 3.1% against a decline of 28% last February.

Wall Street ended mixed on Monday, with the Dow Jones Industrial Average up 0.1%, the S&P 500 up 0.1% and the Nasdaq Composite down 0.1%.

A key focus ahead will be US Federal Reserve Chair Jerome Powell's testimony before Congress, which begins on Tuesday and continues on Wednesday.

"The key focus will be on how Powell sees the US labour market, and whether the FOMC think that economic conditions have improved or deteriorated since the last Fed meeting. Markets will also be paying attention to whether Powell continues to peddle the same narrative of disinflation, which was a hallmark of his last press conference," said CMC Markets' Michael Hewson.

Powell's comments come two weeks before the US central bank's next policy decision. The next Federal Open Market Committee meeting is on March 21 and 22.

The dollar was slightly weaker in early exchanges in London, ahead of Powell's testimony.

Sterling was quoted at USD1.2041 early Tuesday, higher than USD1.2031 at the London equities close on Monday. The euro traded at USD1.0683, up from USD1.0678. Against the yen, the dollar bought JPY135.91, slightly lower versus JPY135.98.

In Asian equities on Tuesday, the Nikkei 225 index closed up 0.3% in Tokyo. In China, the Shanghai Composite was down 1.0%, while the Hang Seng index in Hong Kong was down 0.9%.

The S&P/ASX 200 in Sydney closed up 0.5%, as the Australia's central bank hiked interest rates by 25 basis points to 3.6%.

The move was widely expected. Bank Governor Philip Lowe said he expects further rate increases would be needed to return inflation to the bank's 2% to 3% target range.

Gold was quoted at USD1,847.46 an ounce early Tuesday, edging down from USD1,850.32 on Monday. Brent oil was trading at USD86.49 a barrel, up from USD85.90.

In early corporate news, Anglo-Australian mining firm Rio Tinto will pay a USD15 million penalty to settle a US investigation into payments made to a consultant.

The civil penalty will settle an investigation by the US Securities & Exchange Commission into payments made to a former consultant who helped the company acquire rights to massive iron-ore deposits in Guinea.

The company agreed to the penalty for alleged violations of the US foreign corrupt practices act without admitting to or denying the SEC's findings.

In Tuesday's UK corporate calendar, industrial equipment rental company Ashtead Group will announce in third-quarter results. Estate agent Foxtons and flexible office space provider IWG will announce their full-year results.

In the economic calendar, there are UK house sales figures from Halifax at 0700 GMT.

By Elizabeth Winter, Alliance News senior markets reporter

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