30th Jul 2026 06:56
(Alliance News) - Stocks in London are set to open lower on Thursday, after US stocks tumbled in the wake of Wednesday's Federal Reserve decision.
IG says futures indicate the FTSE 100 to open 80.3 points lower, 0.7%, at 10,828.11 on Thursday. The index of London large-caps closed up 37.39 points, 0.3%, at 10,908.41 on Wednesday.
Federal Reserve Chair Kevin Warsh on Wednesday said the central bank will not waiver in its fight to bring inflation back to target and that higher interest rates can be part of the solution.
The decision, which was expected, leaves the federal funds rate target range at 3.50-3.75%, and marks the Fed's fifth consecutive meeting without a change in rates.
"You have heard this before but we will deliver price stability," the Fed Chair said in a press conference. He said the Fed has a "laser" focus and is "on the case", but stressed there is no "magic wand" in getting inflation on target.
The "pathway to central heaven demands delivering on our remit," he quipped.
Warsh was speaking after the Federal Reserve left interest rates on hold, in a split vote, with three officials pushing for a rate increase.
Warsh said while vote was divided there was overwhelming agreement on the judgement of how best to achieve price stability.
Nine members of the 12-strong Federal Open Market Committee backed the decision for the status quo, but Beth Hammack, Neel Kashkari, and Lorie Logan argued for a quarter point rate hike.
Despite the slightly hawkish slant to the decision, the dollar struggled. Sterling rose to USD1.3352 on Thursday from USD1.3284 at the time of the London equities close on Wednesday. Against the euro, however, it eased to EUR1.1654 from EUR1.1673.
The euro rose to USD1.1453 on Thursday from USD1.1380 late Wednesday afternoon. Versus the yen, the buck fell to JPY163.50 from JPY163.85.
XS.com analyst Linh Tran commented: "At first glance, this reaction may appear contradictory, as a relatively hawkish policy stance would normally support the US dollar. However, market reactions depend not only on what the Fed says, but more importantly on whether its decision is more or less hawkish than what had already been priced in before the meeting.
"Ahead of the Fed's announcement, DXY had risen to its highest level in around one month as some investors expected the central bank to raise interest rates as early as July, or at least provide a clearer signal that further tightening could follow in September. Therefore, the Fed's decision to remain on hold ultimately fell short of the market's relatively hawkish expectations."
The yield on the 10-year US Treasury widened to 4.70% from 4.64%, while the 30-year yield stretched to 5.23% from 5.12%.
Thursday is the turn of the Bank of England, which announces a rate decision at midday. The BoE is expected to hold.
Commerzbank analyst Michael Pfister commented: "Will today's decision by the Bank of England be more exciting than yesterday's Fed decision? Probably not. The market only sees a one percent probability of an interest rate hike, and all of the economists surveyed by Bloomberg expect rates to remain unchanged. We will, of course, be getting new forecasts and a press conference today. But will the BoE use these opportunities to suggest that a rate hike in September is a possibility? After all, the market sees a significant probability (just under 59 percent) of such a move. We have our doubts about this.
"We expect the BoE to want to wait as long as possible before raising interest rates. Ideally, they would probably prefer to avoid raising rates altogether and switch back to rate cuts soon. Today is unlikely to be the right time for that, so their statements are likely to remain rather vague. But if a lasting peace agreement in the Middle East is closer by the time of the September decision, there is likely to be considerable scope for a change in expectations regarding the BoE."
A barrel of Brent rose to USD90.91 on Thursday morning from USD90.09 at the time of the London equities close on Wednesday. Gold rose to USD4,034.78 an ounce from USD4,011.17.
The US military completed a "heavy wave of strikes" against Iran on Thursday in retaliation against Tehran targeting American bases in Jordan, as fighting intensified in the Middle East war after a nearly week-long pause.
The reignited hostilities have drawn in the Islamic republic's proxies, and appear to have dashed hopes of a quick return to negotiations between the foes.
US President Donald Trump had vowed to hit Iran "hard" after Tehran launched missiles at Jordan, its first regional strike in days.
American forces "successfully completed a heavy wave of strikes against Iran", and struck dozens of Islamic Revolutionary Guard targets including military command centres, US Central Command, CENTCOM, said.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 2.2%, the S&P 500 down 1.5% and the Nasdaq Composite down 1.7%.
IG analyst Chris Beauchamp commented: "We are seeing a dramatically divergent reaction to tonight's big earnings. Microsoft appears to be back on track, which is just what the embattled stock price needs. A solid beat on earnings and revenue was underpinned by a 27% jump in Cloud computing revenue, and the commercial backlog remains impressive. The shares have made gains in recent days, and these numbers would appear to reinforce the positive momentum.
"It is a different tale for Meta, thanks to the earnings miss and the new increase to spending forecasts. Like Alphabet, this may prove to be Meta's most impressive bet on long-term growth, but the eye-watering spending levels are still making investors nervous."
Meta Platforms fell 7.5% in pre-market trade, while Microsoft rose 8.9%.
In Asia on Thursday, the Nikkei 225 index in Tokyo was up 0.7%. In China, the Shanghai Composite was down 0.7%, while the Hang Seng index in Hong Kong was 0.1% lower. The S&P/ASX 200 in Sydney was down 0.9%.
Thursday's economic calendar includes the UK interest rate decision, eurozone unemployment and GDP data, and a US GDP reading.
Thursday's UK corporate calendar sees a slew of half-year results, including those from miner Anglo American, pest control specialist Rentokil, lender Lloyds Banking Group and aerospace company Rolls-Royce.
By Eric Cunha, Alliance News news editor
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