29th Sep 2022 06:56
(Alliance News) - Stock prices in London are set to move higher on Thursday, with risk sentiment improved after the Bank of England moved to intervene in a volatile bond market.
Interim results from retail bellwether Next before the opening bell will provide an indication of how UK shoppers are responding to mounting economic pressures.
IG says futures indicate the FTSE 100 index of large-caps to open 17.9 points, 0.3%, higher at 7,023.29 on Thursday. The blue-chip index closed up 20.80 points, also 0.3%, at 7,005.39 on Wednesday.
Stocks in the US ended higher on Wednesday. The Dow Jones Industrial Average closed up 1.9%, the S&P 500 up 2.0% and the Nasdaq Composite up 2.1%.
Equities in the Asia Pacific were on the up on Thursday.
The Nikkei 225 was 1.0% higher in late trade in Tokyo. The S&P/ASX 200 was up 1.8% during late afternoon dealings in Sydney. In China, the Shanghai Composite was up 0.2%, while the Hang Seng was 0.9% higher.
Analysts at ING noted that while equity markets were on the up following the BoE's intervention, the rally on Wall Street and in Asia was more likely due to recent sell-offs being overdone.
The UK central bank on Wednesday said it will buy up long-dated government bonds to "restore orderly market conditions".
"We don't get the sense that international markets were all that worried by the UK's economic and market problems before yesterday, so the rally probably had more to do with markets that had been looking oversold anyway, and month and quarter end re-positioning than the BoE's move itself," analysts at ING commented.
The pound was up ever-so-slightly on Thursday morning. Sterling fetched USD1.0768 early Thursday, firm from USD1.0763 at the London equities close on Wednesday. It had fallen to USD1.0540 on Wednesday, shortly after the BoE announced it would buy long-dated gilts.
Analysts at Rabobank warned there could more pain ahead for currencies that go down the path of resuming quantitative easing.
"The market will smash currencies of those doing QE. While GBP closed higher despite the BoE de facto paying for rich people to buy more stuff, the dollar index collapsed on the mere idea that the Fed might start doing QE again too," Rabobank analysts explained.
The dollar index, which measures the greenback against a basket of major currencies, faded below the 113.0 point mark on Wednesday, having hit a two decade peak of 114.0 points earlier this week.
For the BoE's part, it said gilt-buying will be temporary and will not change the central bank's aim of a targeted GBP80 billion annual reduction in government bond holdings.
The euro rose to USD0.9682 early Thursday from USD0.9645 on Wednesday. Against the yen, the dollar rose to JPY144.56 from JPY144.41.
Gold traded at USD1,648.51 an ounce, down from USD1,653.20. Brent rose to USD88.74 a barrel from USD88.17.
In the international economic events calendar on Thursday, there is a eurozone consumer confidence reading at 1000 BST, followed by a German inflation at 1300 BST and US gross domestic product and core personal consumption expenditures at 1330 BST.
In the local corporate calendar, there are annual results from Allergy Therapeutics and household goods manufacturer McBride. Interim results will be released by retailer Next and oncology drug company Avacta.
By Eric Cunha; [email protected]
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