(Alliance News) - Stocks in London are set to open lower on Wednesday, as oil prices continue to retreat following soft Chinese trade data, adding to a weak demand outlook.

IG says futures indicate the FTSE 100 to open down 21.7 points, 0.3%, at 7,388.34 on Wednesday. The index of London large-caps closed down 7.72 points, 0.1%, at 7,410.04 on Tuesday.

In the absence of any fresh catalysts to drive market sentiment, investors were mulling over the potential trajectory of interest rates amid a steady stream of weak economic data.

"In the space of a week, we've gone from higher for longer back to rate cuts in 2024, and this time the push back from central bankers isn't anywhere near as aggressive," said CMC Markets' Michael Hewson.

"Given the challenges facing the UK economy in the coming months however it's not too much of a stretch to suggest that a lack of demand might do the [Bank of England]'s job for it," he added.

Sterling was quoted at USD1.2278 early Wednesday, lower than USD1.2304 at the London equities close on Tuesday. The euro traded at USD1.0687, flat versus USD1.0688. Against the yen, the dollar was quoted at JPY150.68, up versus JPY150.51.

Central bankers the world over will also be relieved to see the latest fall in oil prices, easing fears of renewed inflationary pressures. A barrel of Brent crude fetched USD81.50 early Wednesday, lower than USD82.55 late Tuesday.

"Oil prices tumbled head over heels, falling to their lowest levels since July. This sharp decline was primarily driven by concerns about the outlook of global demand due to weak data points from China and other economies. China's trade data was a negative double whammy for oil prices, and it got the price ball rolling downhill," noted SPI Asset Management's Stephen Innes.

In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.9%.

In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down 0.3%. In China, the Shanghai Composite was down 0.4%, while the Hang Seng index in Hong Kong was down 0.6%. The S&P/ASX 200 in Sydney closed up 0.3%.

Gold was quoted at USD1,968.68 an ounce early Wednesday, higher than USD1,963.77 on Tuesday.

In Wednesday's UK corporate calendar, Marks & Spencer will announce its half year results. There will also be first quarter results from JD Wetherspoon.

The economic calendar for Wednesday has the eurozone's retail trade reading at 1000 GMT. Before that, there will be CPI data for Germany at 0700 GMT.

By Elizabeth Winter, Alliance News senior markets reporter

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