29th Jan 2015 07:44
LONDON (Alliance News) - London stocks are set to open lower Thursday, picking up on the downbeat sentiment in US markets resulting from further weakness in crude oil prices, despite the US Federal Reserve leaving interest rates unchanged and reiterating its pledge to remain "patient" before beginning to normalize monetary policy.
The FTSE 100 is called to open 45 points down at 6,780.9.7, after the DJIA in New York ended 1.1% lower Wednesday.
The Federal Reserve on Wednesday repeated its pledge to remain "patient" on raising interest rates amid unusually low inflation that could derail the US economic recovery.
"Based on its current assessment, the committee judges that it can be patient in beginning to normalize the stance of monetary policy," the US central bank said at the conclusion of its two-day meeting Wednesday. The statement suggests the Fed is unlikely to raise interest rates until at least June, but probably later.
"US markets fell back dragged down by lower crude oil prices, and a Federal Reserve which appeared apparently unconcerned about the recent rise in the US dollar," says Michael Hewson at CMC Markets. "The Federal Reserve did sound more upbeat about the state of the US economy, noting the strong job gains and improving labour market."
Brent crude is quoted at around USD48.58 a barrel Thursday, and West Texas Intermediate is quoted at USD44.42 a barrel. The US benchmark dipped to a new six-year low of USD43.89 earlier after the weekly inventories report from the US Energy Information Administration showed crude oil stockpiles in the US surged by more than expected last week.
US crude oil inventories to jumped 8.9 million barrels in the week ended January 23, while analysts expected an increase of 3.5 million barrels. As a result, US crude oil inventories surged to 406.7 million barrels as of the end of last week.
Gold is steady, quoted Thursday morning at USD1,280.30 an ounce.
German unemployment declined in December, data from Destatis showed early Thursday, with the adjusted jobless rate falling slightly to 4.8% from 4.9% in the prior month.
Euro area consumer confidence is due at 1000 GMT and German inflation for January at 1300 GMT.
In Asia, Japan's Nikkei closed down 1.1% at 17,606.22 Thursday. The Hang Seng in Hong Kong is 1.1% lower at 24,590.85, and the Shanghai Composite ended down 1.3% at 3,262.305.
Among UK companies, Diageo said six-month net sales were broadly flat, with sales falling fractionally to GBP5.9 billion and organic volumes dropping 1.9%, though the company said performance improved in the second quarter to December 31.
Royal Dutch Shell said fourth quarter profit on a current cost of supplies basis, which excludes price changes in inventories, was USD4.2 billion compared with USD2.2 billion for the same quarter a year earlier, giving full year 2014 earnings of USD19.0 billion compared with USD16.7 billion in 2013. Full year 2014 oil and gas production was 3.08 million barrels of oil equivalent a day, a decrease of 4% compared with 2013.
Pub operator Mitchells & Butlers said the festive period saw a good trading performance, with like-for-like sales growth of 4.8% in the two weeks of Christmas and New Year.
US earnings later Thursday include Alibaba, Amazon, ConocoPhillips, Dow Chemicals, Ford and Visa.
By Ian Edmondson; [email protected]
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