London pre-open: Stocks seen flat as traders return after long weekend

Stocks in London were expected to open flat on Tuesday as traders returned to their desks after the Bank Holiday weekend.

London’s FTSE 100 is expected to open unchanged at 6,270.

Investors in the UK will get their first chance to react to the latest comments by Federal Reserve Chair Janet Yellen, who said on Friday that a rate hike in the coming months “would be appropriate” if the economy and labour market continue to show an improvement.

“Fed officials have repeatedly claimed that a summer rate hike would be a reasonable assumption, a view that was supported as recently as Friday by Chair Janet Yellen, although as always, the decision will be data dependent. I imagine the UK’s referendum on EU membership will also be an important factor, depending on just how close the polls are come the Fed meeting,” said Oanda’s Craig Erlam.

There are no major UK data due but in the US, personal income and spending figures are at 1330 BST, while S&P/Case-Shiller home prices are at 1400 BST. Chicago PMI is at 1445 BST and consumer confidence is at 1500 BST.

IG Group reported solid trading in the fourth quarter and said earnings for the year are set to be slightly ahead of expectations.

In a very brief trading update, the company said it performed well during what was a relatively quiet period in financial markets, with all key operating and financial metrics remaining strong.

“As outlined in the third quarter trading update, this continued robust performance has resulted in higher variable operating costs in the last part of the year, including an increase in online marketing spend, where the payback remains compelling,” IG said.

However, it said the cost increase was more than offset by ongoing strength in trading revenue, so it now expects full-year earnings to be slightly ahead of views.

Alliance Trust said it has received an unsolicited, informal approach from fellow FTSE 250 investment trust RIT Capital Partners that proposed a merger of the two companies.

Alliance stressed that "no detailed terms" were provided by RIT and it will incorporate any formal offer within its recently started internal strategic review.

Directors added that as there could be no certainty that any transaction will result from the strategic review, shareholders were strongly advised to take no action and to await the outcome of its review.