18th Sep 2025 06:53
(Alliance News) - Stocks in London are set to open higher on Thursday, after the Federal Reserve cut rates as expected, with the Bank of England decision now on the horizon.
IG says futures indicate the FTSE 100 to open 10.5 points higher, 0.1%, at 9,218.87 on Thursday. The index of London large-caps closed up 12.71 points, 0.1%, at 9,208.37 on Wednesday.
In New York on Wednesday, the Dow Jones Industrial Average rose 0.6%, but the S&P 500 lost 0.1% and the Nasdaq Composite shed 0.3%.
The yield on the US 10-year Treasury was quoted at 4.06% early Thursday, widening from 4.04% at the time of the London equities close on Wednesday. The yield on the US 30-year Treasury was quoted at 4.66%, stretching from 4.64%.
The pound fell to USD1.3605 on Thursday morning, from USD1.3661 at the time of the London equities close on Wednesday. The euro fell to USD1.1797 from USD1.1847, while against the yen, the dollar rose to JPY147.24 from JPY146.35.
The Federal Reserve on Wednesday cut rates as it grapples with complicated moving parts in the labour market and in inflation, providing the central bank with a "curious balance".
Federal Reserve Chair Jerome Powell said inflation risks are tilted to the upside, but conversely, the labour market is fighting downside risks.
"A challenging situation," Powell told reporters in a press conference after the decision was announced.
At the conclusion of its two-day meeting, the Federal Open Market Committee voted to lower rates to the 4.00%-4.25% range. It was its first cut of the year. The sole dissenting voice was newly appointed board member Stephen Miran, who backed a 50bp cut.
Powell labelled it a "risk management cut".
"Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated," it added.
In considering "additional adjustments to the target range for the federal funds rate," the FOMC said it will "carefully assess incoming data, the evolving outlook, and the balance of risks."
Commerzbank analyst Michael Pfister said the Fed "refrained from any surprises"
"The dot plots, ie the expected key interest rates over the coming years, were just 25 basis points lower than before on average, but again, there were no major surprises. However, it is probably easy to guess which member considers interest rate cuts to below 3% to be appropriate this year," Pfister said.
"Somewhat surprisingly, the market initially interpreted these changes as clearly dovish. The USD came under considerable pressure, with levels above 1.19 in EUR-USD being reached. Apparently, some market participants focused on the fact that a further two interest rate cuts of 25 basis points are expected this year. However, USD weakness did not last long and, shortly after the press conference began, the move to higher levels ended. Ultimately, EUR-USD closed slightly lower."
On Thursday's economic calendar, all eyes will be on the Bank of England's interest rate decision at midday. US weekly jobless claims data is released at 1330 BST.
The BoE is expected to leave rates unmoved on Thursday.
Berenberg analysts commented: "Our economists foresee no further rate cuts in 2025 from the Bank of England thanks to more persistent inflation than the market expects, but they forecast two 25bp cuts in 2026 as demand cools and wage inflation falls. Crucially, this means they expect that any further expansion in gilt yields will be limited."
Friday is the turn of the Bank of Japan.
Ahead of the decision, the Nikkei 225 in Tokyo was up 1.2% in late trade on Thursday.
In China, the Shanghai Composite was 0.2% lower, while the Hang Seng Index was down 1.0%. In Sydney, the S&P/ASX 200 fell 0.7%.
Gold declined to USD3,655.61 an ounce early Thursday, from USD3,685.67 at the time of the closing bell in London on Wednesday. A barrel of Brent fell to USD67.67 from USD68.04.
On Thursday's UK corporate calendar, Renishaw releases its full-year results and Next has its half-year earnings.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.