Stocks seen lower; Fed hints at more hikes

(Alliance News) - Stocks in London are set to open lower on Thursday, as sentiment took a hit from hawkish minutes from the Federal Reserve.

IG says futures indicate the FTSE 100 to open down 42.6 points, 0.6%, at 7,314.28 on Thursday. The index of London large-caps closed down 32.76 points, 0.4%, at 7,356.88 on Wednesday, in a four-day losing streak.

Wednesday's minutes from July's Federal Open Market Committee meeting showed US Federal Reserve officials continue to see "significant" upside risks to inflation and suggested further interest rate increases may be necessary.

At that meeting, the US central bank lifted rates by a further 25 basis points to 5.25% to 5.50%, the highest level in more than two decades, a rise that many economists believe will be the last of this cycle. But, talks showed that most participants fear that the battle to tame inflation is far from over and could require additional tightening action.

"With inflation still well above the committee's longer-run goal and the labour market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy," the meeting summary stated.

The news sent equities lower, while the dollar made gains against major currencies in early transactions in Europe.

In the US on Wednesday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.5%, the S&P 500 down 0.8% and the Nasdaq Composite down 1.2%.

Sterling was quoted at USD1.2720 early Thursday, lower than US1.2750 at the London equities close on Wednesday. The euro traded at USD1.0865, lower than USD1.906. Against the yen, the dollar was quoted at JPY146.40, up versus JPY145.77.

Gold was quoted at USD1,893.13 an ounce early Thursday, lower than USD1,902.61 on Wednesday. Brent oil was trading at USD83.35 a barrel, lower than USD84.83.

In Asia on Thursday, the Nikkei 225 index in Tokyo was down 0.4%.

Japan reported a trade deficit of JPY78.73 billion, or around USD538 million, in July. This was narrowed than the JPY1.422 trillion deficit seen in July 2022.

According to the Ministry of Finance, exports fell 0.3% year-on-year to JPY8.725 trillion from JPY8.753 trillion, led by falling exports of machinery, and electrical machinery. This was offset somewhat by growth in transport equipment exports. Imports dropped 14% annually to JPY8.804 trillion from JPY10.175 trillion, led by lower imports of mineral fuels.

In China, the Shanghai Composite was down 0.3%, while the Hang Seng index in Hong Kong was down 1.0%. The S&P/ASX 200 in Sydney was down 0.7%.

Thursday's economic calendar has eurozone trade data at 1000 BST, before the latest US jobless claims reading at 1330 BST.

The local corporate calendar has half-year results from Bank of Georgia Group and Empiric Student Property. Grosvenor Casinos and Mecca bingo owner Rank Group reports annual results.

By Elizabeth Winter, Alliance News senior markets reporter

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