31st Jul 2025 06:52
(Alliance News) - Stocks in London are set to open marginally higher on Thursday, amid a swathe of market catalysts as the Federal Reserve held interest rates while US technology companies beat expectations.
IG says futures indicate the FTSE 100 to open just 2.4 points higher at 9,139.34. The index of London large-caps closed up just 0.62 of a point at 9,136.94 on Wednesday.
Sterling was lower at USD1.3269 early Thursday from USD1.3285 at the London equities close on Wednesday.
The euro traded at USD1.1599, higher than USD1.1479 late Wednesday. Against the yen, the dollar was quoted at JPY148.82 versus JPY148.94.
The yield on the 10-year US Treasury narrowed to 4.35% from 4.37%. The yield on the 30-year slimmed to 4.88% from 4.91%.
The US Federal Reserve left interest rates unchanged for the fifth meeting in a row, in a split vote, as it continues to adopt a wait-and-see approach to tariffs.
At the conclusion of its two-day meeting, the Federal Open Market Committee voted to maintain rates at the 4.25%-4.50% range. Two members of the rate-setting Federal Open Market Committee dissented, with governors Christopher Waller and Michelle Bowman backing a quarter-point cut.
In a statement, the FOMC said uncertainty about the economic outlook remains elevated and that recent indicators suggest that growth of economic activity moderated in the first half of the year.
"The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated," the FOMC added.
The Fed chair said the impact of tariffs remains to be seen, although he suggested the pace of economic growth has moderated. Jerome Powell said that higher tariffs have begun to show up in some prices of goods.
"It feels like there’s much more to come," he added. "You have to think of this as still quite early days," Powell said about the new trade policy, adding there's a "long way to go."
Powell said no decision has been made on September, adding the Fed does not make decisions in advance. The Fed chair said the policy rate today is moderately restrictive and "it seems to me, and to almost the whole committee, that the economy is not performing as though restrictive policy is holding it back inappropriately."
Looking ahead, Stephen Innes of SPI Asset Management said: "A December cut still seems the most plausible entry point. Inflation could ebb as tariffs pass through, labour demand is cooling, and the housing market is shifting into disinflation mode. If the dam breaks, a 50bp move wouldn’t surprise. That’s exactly how they played it in 2024—wait until conviction is high, then go big."
Overnight, the Bank of Japan also left its main interest rate unchanged at 0.5%, as expected by economists.
Earnings season continued to unfold as some of the biggest technology companies in the US beat expectations.
Microsoft shares jumped after it reported better-than-expected results led by a blowout performance from its cloud business, Azure.
The Redmond, Washington-based software and technology conglomerate said net income rose 24% to USD27.23 billion in the quarter to June 30, Microsoft's fourth quarter, from USD22.04 billion a year prior.
Diluted earnings per share increased 24% to USD3.65 from USD2.95 a year ago, ahead of consensus of USD3.37. Revenue leapt 18% to USD76.44 billion from USD64.73 billion a year ago and ahead of USD73.9 billion consensus.
Meta Platforms shares climbed after hours as the Menlo Park, California-based technology and social media company reported second quarter results ahead of expectations.
Meta second quarter net income climbed 36% to USD18.34 billion from USD13.47 billion a year prior, or by 38% to USD7.14 from USD5.16 on a diluted per-share basis. Revenue was USD47.52 billion, up 22% from USD39.07 billion.
Of this, Advertising revenue grew to USD46.56 billion from USD38.33 billion. Reality Labs revenue increased to USD370 million from USD353 million. Revenue was 6% above Yahoo-cited consensus. EPS was 21% ahead.
For the third quarter, Meta sees revenue between USD47.5 billion and USD50.5 billion, assuming a foreign currency tailwind of about 1%.
In tariffs, US President Trump said India will face 25% tariffs and announced an unspecified "penalty" over New Delhi's purchases of Russian weapons and energy. The measures will kick in on Friday, Trump posted on his Truth Social platform.
Meanwhile, the US will impose a 15% tariff on imports from South Korea, as Trump touted a "full and complete trade deal" between both countries.
"Intriguingly, despite having been guided to expect such a decision, we learned nothing about a potential extension to the current US-China trade truce yesterday, though the base case remains that the can is indeed kicked down the road on that front," noted Pepperstone analyst Michael Brown.
In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.4%, the S&P 500 0.1% lower and the Nasdaq Composite advanced 0.2%.
Meanwhile in the UK, the confidence of UK employers is at its highest in over two years, data published by the Recruitment & Employment Confederation showed. Employers' confidence in the UK economy is at minus 20 in the three months to June, up 15 percentage points compared to the three months to April.
In Asia on Thursday, the Nikkei 225 index in Tokyo was up 1.1%. In China, the Shanghai Composite was fell 1.0%, while the Hang Seng index in Hong Kong was down 1.5%. The S&P/ASX 200 in Sydney was 0.2% lower.
Gold was quoted at USD3,295.70 an ounce early Thursday, higher than USD3,292.75 on Wednesday. Brent oil fell to USD72.22 a barrel from USD72.99.
Thursday's local corporate calendar has half-year results from miner Anglo American, tobacco manufacturer BAT, gold miner Endeavour Mining, consumer products firm Haleon, stock exchange operator and data provider London Stock Exchange, aerospace company Rolls-Royce and oil major Shell. Retailer Next is set to update on trading.
Standard Chartered early Thursday announced a new USD1.3 billion share buyback as it reported a rise in second quarter earnings amid a strong period for its wealth management offering.
The company also raised its dividend and boosted its outlook.
The Asia-focused banking firm said pretax profit in the three months to the end of June increased 44% on-year to consensus-topping USD2.28 billion from USD1.58 billion a year prior. A pretax profit outcome of USD1.73 billion was expected, according to company-compiled consensus.
The net interest margin weakened on-year to 1.98% from 2.03%.
The global economic calendar on Thursday sees US weekly initial jobless claims, the Chicago PMI and personal consumption expenditures figures. There will also be consumer price index figures from Germany and France.
By Michael Hennessey, Alliance News reporter
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