9th Jan 2025 06:49
(Alliance News) - London's FTSE 100 is set to open higher on Thursday, shaking off tepid China data and concerns over the US interest rate outlook.
IG says futures indicate the FTSE 100 to open 17.0 points higher, 0.2%, at 8,268.03 on Thursday. The index of London large-caps ended up 5.75 points, 0.1%, at 8,251.03 on Wednesday.
The pound faded to USD1.2313 early Thursday, from USD1.2351. Sterling fell as low as USD1.2304 on Thursday, its worst level since April. The euro was largely unmoved at USD1.0302 from USD1.0303. Against the yen, the dollar fell to JPY158.12 from JPY158.37.
Brent fetched USD76.13 a barrel, falling from USD76.25. Gold declined to USD2,660.71 an ounce from USD2,665.55.
"The past few days have certainly not been a bed of roses for UK bulls: 10-year gilt yields have reached their highest level since 2008 and 30-year yields even since 1998. At the same time, the pound has also come under significant pressure, losing almost 1% of its value against the US Dollar yesterday," Commerzbank analyst Michael Pfister commented.
"There was no specific reason for yesterday's market movements - there was no UK data or official statements on the agenda. Rather, it seems to be the culmination of a development that began several months ago. The new Labour government's approval ratings are at record lows just a few months after the election, and business and consumer sentiment is severely depressed. The recent budget has also highlighted the government's very limited room for manoeuvre, and rising yields are likely to further reduce this room for manoeuvre, increasing the risk of further tax increases or budget cuts."
Pfister added: "Despite these factors, we believe that the current market reaction is somewhat overdone. We continue to believe that the UK is likely to be less affected by potential US tariff plans than, for example, the euro area. Moreover, while consumer and business sentiment fell sharply in autumn, it has recovered somewhat recently. And in our view, UK growth in the third quarter understated the underlying trend somewhat, just as growth in the first half of the year was probably somewhat overstated."
In New York on Wednesday, the Dow Jones Industrial Average added 0.3%, the S&P 500 rose 0.2% and the Nasdaq Composite lost 0.1%.
Federal Reserve officials said the path for interest rates was uncertain in the year ahead, reflecting concerns about inflation and changes to trade policy, minutes from December's Federal Open Market Committee meeting on Wednesday showed.
"Almost all participants judged that upside risks to the inflation outlook had increased," the minutes said. "As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy."
But the current "high degree of uncertainty" made it appropriate for the FOMC to take a "gradual" approach as it moved toward a neutral policy stance.
In China on Thursday, the Shanghai Composite was down 0.4%. The Hang Seng Index in Hong Kong was flat.
China narrowly avoided slipping into deflation in December with prices rising at their slowest pace in nine months, official figures showed Thursday, as Beijing struggles to kickstart consumer activity in the world's number two economy.
The tepid reading comes after the government unveiled a range of measures at the end of last year aimed at boosting consumption as well as providing support for the troubled property sector, including interest rate cuts.
However, data showed that has not yet filtered through, with the consumer price index, a key measure of inflation, easing to growth of 0.1% on-year last month, from 0.2% in November, according to the National Bureau of Statistics. The reading is the lowest since March. A survey of economists had forecast 0.1%.
In Tokyo on Thursday, the Nikkei 225 was down 0.9%. Over in Sydney, the S&P/ASX 200 fell 0.2%.
Thursday's local corporate calendar sees trading statements from retailer Marks & Spencer, grocer Tesco and baker Greggs.
Financial markets in New York are closed for a day of mourning following the death of Jimmy Carter last month.
The economic calendar has German industrial output data at 0700 GMT and eurozone retail sales at 1000 GMT.
By Eric Cunha, Alliance News news editor
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