26th Jul 2019 06:52
(Alliance News) - Stocks in London are set to open lower on Friday, extending the previous session's losses as traders look ahead to a second quarter GDP reading from the US for confirmation the Federal Reserve will cut interest rates next week.
IG says futures indicate the FTSE 100 index of large-caps to open 2.35 points lower at 7,491.40 on Friday. The FTSE 100 index closed down 12.41, or 0.7%, at 7,489.05 on Thursday.
In the US on Thursday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 0.5%, the S&P 500 down 0.5% and Nasdaq Composite closing 1.0% lower.
"European and US markets sank rather sharply yesterday, inhibited by mixed messaging from the European Central Bank about further stimulus, and the prospect that next weeks Fed meeting may not be as dovish as expected. This uncertainty has elicited a similar response from markets in Asia where the Bank of Japan also has a similar decision to make next week about easing policy further," said Michael Hewson at CMC Markets.
In Asia on Friday, the Japanese Nikkei 225 index is down 0.6%. In China, the Shanghai Composite is flat, while the Hang Seng index in Hong Kong is down 0.5%.
"Today's first iteration of US Q2 GDP number could well introduce further doubt into market expectations of what sort of messaging that we might get from the Federal Reserve next week," said Hewson.
US second quarter gross domestic product data are due at 1330 BST alongside personal consumption expenditure figures.
"Early estimates are for a number between 1% and 2%, with recent revisions suggesting something nearer to 2%. Any number above 2% would inevitably raises questions as to why it’s even necessary to consider a rate cut, but given weaknesses elsewhere in the global economy, it would still be a big surprise were the Fed not to go next week," said Hewson.
According to the CME's FedWatch tool, a rate cut next week is 79% priced in by markets.
In Europe on Friday, German import price index data are released at 0700 BST with French consumer confidence figures at 0745 BST.
In UK corporate events on Friday, full year results are due from retailer Sports Direct International. Meanwhile, half year results are expected from lender AIB, online property website Rightmove, publisher Pearson and engineer IMI.
In addition, first quarter results are expected from telecommunications firm Vodafone and baby and children equipment retailer Mothercare.