(Alliance News) - London's FTSE 100 is called to open lower on Thursday, after US stocks faltered on dwindling Federal Reserve rate cut expectations and as investors digest the UK chancellor's Wednesday budget.
IG says futures indicate the FTSE 100 to open 23.0 points lower, 0.3%, at 8,136.63 on Thursday. The index of London large-caps closed down 59.98 points, 0.7%, at 8,159.63 on Wednesday.
In New York, the Dow Jones Industrial Average lost 0.2% on Wednesday. The S&P 500 fell 0.3% and the Nasdaq Composite shed 0.6%.
"Sky-high valuations met a stubbornly high 10-year yield pressing up to 4.30%, and investors are increasingly demanding stellar, not just solid, earnings, especially as traders recalibrate bets on policy easing following strong Q3 GDP data," SPI Asset Management analyst Stephen Innes commented.
In Tokyo on Thursday, the Nikkei 225 was down 0.5%. The Shanghai Composite in China was up 0.2%, while the Hang Seng in Hong Kong added 0.1%. The S&P/ASX 200 fell 0.3%.
The Bank of Japan kept its main interest rate unchanged on Thursday, as widely expected, warning of "high uncertainties surrounding Japan's economic activity and prices", AFP reported.
The BoJ, which hiked interest rates in March for the first time in 17 years, said on Thursday it will maintain the key lending cost at 0.25%. In an outlook report, the bank said there are "high uncertainties surrounding Japan's economic activities and prices".
"Japan's economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions," it said.
The BoJ said it expected inflation of 2.5% for the current fiscal year to March 2025 before moderating to 2.0% in the following two years.
The pound was quoted at USD1.2948 early Thursday, down from USD1.3006 at the London equities close on Wednesday.
Barclays said Wednesday's budget by Chancellor Rachel Reeves was more "expansionary" than it anticipated.
"Chancellor Reeves delivered a big increase in spending, just over half of which is covered by higher taxes and the rest by a rise in borrowing. The package could improve sentiment around UK stocks. But the gilt curve is likely to remain under steepening pressure," Barclays said.
"Based on our initial assessment of its composition, we think the impact on real GDP growth and inflation could be to raise both in the near term, with estimated impacts outlined by the OBR appearing plausible. This poses upside risks to our growth and inflation forecasts. However, against this, we do not think the news sufficient to change our BoE call of sequential 25bp cuts from November, although we think that the risks of a slightly slower pace of easing have risen and we look to next week's MPC meeting and its updated macroeconomic projections."
Eyes were on the bond market reaction. The yield on the UK 10-year gilt stretched to 4.36% late Wednesday, from as low as around 4.21% earlier that day.
The euro stood at USD1.0849, fading from USD1.0863. Against the yen, the dollar was trading at JPY152.89, down from JPY153.03 at the time of the European equities close on Wednesday.
Gold was quoted at USD2,783.89 an ounce, falling from USD2,786.80. Brent oil fetched at USD72.53 a barrel, rising from USD72.17.
In Thursday's UK corporate calendar, there are trading statements from soft drink bottler Coca-Cola HBC and consumer health company Haleon. Oil major Shell releases third-quarter results.
The economic calendar has German retail sales at 0700 GMT, eurozone inflation data at 1000 and the latest US initial jobless claims reading at 1230. Also in focus will be the September personal consumption expenditures data.
By Eric Cunha, Alliance News news editor
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