The FTSE 100 was trading slightly higher as we approached the testimony by the Federal Reserve Chair to Congress on Tuesday.
After weeks of company updates, corporate news flow is beginning to wane as most companies have already reported recent results to the market.
The void of major company earnings has paved the way for macroeconomics to become the focus of markets this week and all eyes will be on the Fed Chair and economic data set for release later this week.
Powell has the opportunity to set the market narrative for the coming weeks in his delivery today.
“With investors on tenterhooks about just how far interest rates will rise, and what effect this will have on the world’s largest economy, Fed chair Jerome Powell’s words in Washington as he speaks to senators later are likely to set off a ripple effect through indices,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Any hint that he’s swirling the latest data and is finding a pattern of inflation that’s stubbornly hard to shift, could trigger fresh falls in equities, and may see bond yields edge up.”
The FTSE 100 was trading 7,957 at the time of writing.
GBP/USD was trading marginally lower as traders bid the dollar higher in anticipation of potentially hawkish comments from Jerome Powell later today.
Recent robust economic data has started to build a consensus the next Fed rate hike will be a 50bps increase – higher than the 25bps hoped for by equity traders at the beginning of 2023.
The lower cable rate provided some support for the FTSE 100s overseas earners. AstraZeneca, Diageo and HSBC were up between 0.5% and 1% on Tuesday.
Melrose was the FTSE 100’s top riser, up 3.6%, ahead of its ex-dividend date this Thursday.