1st Oct 2026 06:58
(Alliance News) - Stocks in London are set to open lower on Thursday, despite tamer US inflation data taking some sting out of Federal Reserve rate hike expectations.
Yields, particularly those with a longer duration, remained at elevated levels as traders digested the data.
"Softer PCE bought the front end some breathing room, but the long end barely flinched," Quintex Intel analyst Stephen Innes commented. "Part of the inflation relief came from BEA methodology changes, so the headline miss was cleaner than the underlying story."
"Wall Street held together for most of Wednesday, then lost its nerve into the close."
IG says futures indicate the FTSE 100 to open 44.6 points lower, 0.4%, at 10,561.40 on Thursday. The index of London large-caps ended down 30.71 points, 0.3%, at 10,606.00 on Wednesday.
Sterling declined to USD1.3249 early Thursday, from USD1.3276 late Wednesday afternoon. Against the euro, it bought EUR1.1698, up from EUR1.1688.
The single currency fell to USD1.1320 from USD1.1359. Against the yen, the dollar shot up to JPY158.35 from JPY157.15.
In the US on Wednesday, the performance on Wall Street was mixed, with the Dow Jones Industrial Average down 0.9%%, the S&P 500 down 0.3% and the Nasdaq Composite up 0.2%.
Swissquote analyst Ipek Ozkardeskaya commented: "Softer-than-expected PCE numbers – though inflation remains above the Federal Reserve's 2% target and still requires attention – helped cool Fed rate hike expectations. The US 2-year yield, which best captures Fed rate expectations, fell – although the easing remained short-lived. Today, we can say that at least it didn't push any higher. Again, yesterday's softer-than-expected PCE reading doesn't mean that the Fed won't hike, but the urgency has eased somewhat."
The Bureau of Economic Analysis said US gross domestic product rose 2.2% on an annualised basis quarter-on-quarter, upwardly revised from an initially reported 1.5% increase.
Separate data showed the core personal consumption expenditures price index rose 3.0% on-year in August, the same pace of growth as in July. However, growth of 3.3% had been expected for August, according to consensus cited by FXStreet.
US private-sector employment growth accelerated in September, rebounding after a three-month slowdown, separate figures from payroll processor ADP showed on Wednesday.
Private employers added 90,000 jobs in September, up sharply from a downwardly revised 36,000 in August. The August figure was previously reported at 38,000.
In Tokyo on Thursday, the Nikkei 225 roared 3.1% in late afternoon trade, with semiconductor companies among those shining. Tokyo Electron shot up 5.6%. However, the S&P/ASX 200 in Sydney was down 1.7%. Financial markets in Shanghai and Hong Kong were closed on Thursday.
The yield on the US 10-year Treasury was quoted at 5.27% on Thursday morning, narrowing slightly from 5.28% at the time of the London equities close on Wednesday. The yield on the US 30-year Treasury was steady at 5.62%.
Brent faded to USD96.68 a barrel early Thursday, from USD103.82 late Wednesday afternoon. Gold traded at USD4,188.41 an ounce, up from USD4,158.28.
Quintex Intel analyst Innes commented: "Crude is falling, yet bond yields are still pushing higher. That matters because if oil were the main culprit behind the inflation scare, lower crude should at least be taking some pressure off the long end. Instead, bonds are increasingly trading on their own structural problems while oil is being driven by a separate geopolitical story. The message is uncomfortable.
"The bond selloff is no longer just an energy shock in disguise. It is starting to look like a broader repricing of inflation risk, term premium and the global cost of capital. Oil can wobble lower. Rates, so far, are refusing to care."
Thursday's local corporate calendar has trading statements from electricity generator SSE and retailer Topps Tiles.
Thursday's global economic calendar has UK house prices for September to be released by Nationwide shortly.
Further, it has a slew of manufacturing PMI readings, including the UK at 0930 BST. Eurozone unemployment figures will be released, as will US initial jobless claims data.
By Eric Cunha, Alliance News news editor
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