London Stocks Expected to Open Slightly Higher on Interest Rate Considerations

(Alliance News) – Stocks in London are expected to open slightly higher on Friday as investors consider potential interest rate paths.

IG says futures indicate the FTSE 100 is expected to open up 5.6 points, or 0.1 per cent, at 7,447.32 on Friday. London’s large-cap index closed up 15.58 points, or 0.2 percent, at 7,441.72 on Thursday.

Sterling has slumped in recent days as investors anticipate the Bank of England is nearing the end of its rate hike cycle, amid dovish rhetoric from the central bank and recent data weak economics.

Sterling was trading at $1.2494 early Friday, little changed from $1.2493 at the close of London stock markets on Thursday.

In further evidence that high interest rates are doing their job, figures showed that the UK jobs market slowed sharply in August as the weaker economic outlook depressed recruitment activity.

The KPMG and REC UK jobs report showed permanent hires fell at the steepest rate in three years, while temp bills contracted for the first time since July 2020.

The euro traded at $1.0716, up from $1.0702. Against the yen, the dollar was quoted at 147.21 yen, down slightly from 147.23 yen.

Investors also took into account the latest comments from the US Federal Reserve.

High U.S. interest rates are playing their part in fighting inflation, but more hikes may still be needed, senior Fed officials said. Comments from the three regional Fed chairs with voting power on interest rate setting will likely reinforce expectations that the U.S. central bank intends to keep rates steady later this month, while signs of weakening of the labor market are becoming more and more numerous.

“Dallas Fed President Lorie Logan said at a conference in Dallas on Thursday, in prepared remarks, that another jump might be appropriate when we meet later this month .” She added that further assessment of the data and outlook could confirm that we need to do more to extinguish inflation.

In the United States, Wall Street finished mixed, with the Dow Jones Industrial Average up 0.2%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.9%.

Apple shares fell sharply for the second straight session following reports of significant Chinese restrictions on iPhones in government offices and state-backed entities.

In Asia on Friday, the Nikkei 225 index in Tokyo was down 1.4%, after Japan’s growth was revised downward in the three months to June. In the second quarter, gross domestic product increased by a revised 1.2%, due to weak domestic demand and business investment, according to official data.

The preliminary estimate of 1.5% on August 15 had shattered estimates and was the fastest rate since the fourth quarter of 2020 in the world’s third-largest economy.

In China, the Shanghai Composite Index fell 0.2%, while financial markets in Hong Kong were closed due to a storm. The semi-autonomous city experienced the heaviest rainfall in 140 years, just a week after the financial center was shut down by a super typhoon. The S&P/ASX 200 in Sydney was down 0.4%.

Gold was trading at $1,925.21 an ounce early Friday, higher than Thursday’s $1,919.30.

Brent oil was trading at $89.31 a barrel, down from $90.31.

In Friday’s UK business calendar there are half-year results from Petershill Partners and Computacenter, as well as a trading statement from Berkeley.

The economic calendar forecasts German inflation data at 0700 BST.

By Elizabeth Winter, Alliance News Senior Markets Reporter

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2023-09-08 05:50:06
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