25th Feb 2021 06:56
(Alliance News) -Â Stocks in London are set to extend gains on Thursday as US Federal Reserve Chair Jerome Powell managed to soothe fears over runaway inflation and sooner-than-expected policy tightening.
"After last night's record close for the Dow and subsequent rebound in the S&P500 and Nasdaq, markets here in Europe look set to open higher encouraged by the prospects of a continued reopening, and central banks that are in no hurry to pare back their stimulus attempts, as Asia markets reversed yesterday's declines," said Michael Hewson, chief market analyst at CMC Markets.
IG says futures indicate the FTSE 100 index of large-caps to open up 26.03 points, or 0.4% higher at 6,685.00 on Thursday. The FTSE 100 closed up 33.03 points, or 0.5%, at 6,658.97 on Wednesday.
Wall Street ended in record territory on Wednesday, with the Dow Jones Industrial Average ending up 1.4%, the S&P 500 up 1.1% and Nasdaq Composite closing 0.8% higher.
On his second day of Congressional testimony, US Federal Reserve Chair Jerome Powell reiterated his view that the US labour market has a long way to go as it recovers from jobs lost in the pandemic and that the central bank is likely to maintain its ultra-easy monetary policy for the foreseeable future.
Jeffery Halley at Oanda commented: "Apart from highlighting something already mentioned here previously, that cost/push inflation as the global recovery gathers pace would be transitory (one-off rises in components of the CPI drop out after a year), Powell emphasised that employment targets were far away and that monetary policy would remain lower for longer.
"That was enough for the perpetual circling dip-buyers in multiple asset classes to re-emerge from hiding. Equities abruptly reversed their losses and powered higher."
The mood was lifted further as analysis by US regulators showed Johnson & Johnson's single-dose vaccine protects against Covid-19.
The US Food & Drug Administration scientists confirmed that overall the vaccine is about 66% effective at preventing moderate to severe Covid-19. The agency also said J&J's shot - one that could help speed vaccinations by requiring just one dose instead of two - is safe to use.
On Friday, the agency's independent advisers will debate whether the evidence is strong enough to recommend the long-anticipated shot. Armed with that advice, the FDA is expected to make a final decision within days.
In further positive vaccine news, Pfizer's jab has proven 94% effective in a study involving 1.2 million people in Israel, the first peer-reviewed real world research confirming the power of mass immunization campaigns to bring the pandemic to a close.
The paper, which was published in the New England Journal of Medicine on Wednesday, also demonstrated there is likely a strong protective benefit against infection, a crucial element in breaking onward transmission.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 1.7%. Against the yen, the dollar eased to JPY105.95 versus JPY106.00.
In China, the Shanghai Composite is up 0.4%, while the Hang Seng index in Hong Kong is up 1.6%. The S&P/ASX 200 in Sydney closed up 0.8%.
Sterling was quoted at USD1.4157 early Thursday, higher than USD1.4100 at the London equities close on Wednesday. The euro traded at USD1.2178 early Thursday, up from USD1.2127 late Wednesday.
Gold was quoted at USD1,795.16 an ounce early Thursday, soft on USD1,796.20 on Wednesday. Brent oil was trading at USD67.25 a barrel early Thursday, climbing from USD67.02 late Wednesday.
The economic events calendar on Thursday has eurozone consumer confidence figures at 1000 GMT. In the afternoon there are US GDP readings and the latest jobless claims numbers at 1330 GMT.
The UK corporate on Thursday has annual results from miner Anglo American, defence giant BAE Systems, packaging firm Mondi, drugmaker Hikma, Russian steelmaker Evraz and from luxury carmaker Aston Martin Lagonda.
Already out, Standard Chartered reported a sharp drop in profit for 2020, with both profit and income unable to match market consensus, but believes it is well placed to capture the benefits from a global economy returning to growth.
Chief Executive Bill Winters said: "We are weathering the health crisis and geopolitical tensions very well. We remain strong and profitable, although clearly impacted by credit challenges and low interest rates. Our strategic transformation continues to progress well, and our outlook is bright."
For 2020, the London-headquartered but Asia-focused bank recorded pretax profit of USD1.61 billion, down 57% from the USD3.71 billion reported in 2019. StanChart's profit mark came in below market consensus of USD1.85 billion.
StanChart shares in Hong Kong were down 2.6%.
By Lucy Heming;Â [email protected]
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