(Alliance News) - Stocks in London are set to open in the red on Friday, as investors reflect on a central bank-dominated week, and look ahead to the latest series of flash purchasing managers' index readings.
IG says futures indicate the FTSE 100 to open down 12.2 points, 0.2%, at 7,666.42 on Friday. The index of London large-caps closed down 53.03 points, 0.7%, at 7,678.62 on Thursday.
Sterling was quoted at USD1.2284 early Friday, down from USD1.2297 at the London equities close on Thursday.
Investors were digesting the latest decision from the Bank of England, after maintained bank rate at 5.25%, a more than 15-year high, in what was somewhat of a surprise move. According to FXStreet cited consensus, a 25 basis point hike was expected, though a tamer UK inflation reading earlier this week meant some investors dialled back their rate hike bets.
The focus now is on whether the BoE hikes again, and when it might see fit to begin rate cuts.
"The Bank of England made it clear that it's still locked in a fight against inflation. Rates could go up again in future, and at the very least are expected to hold at this level for a significant period until inflation is under control," said Sarah Coles, head of personal finance at Hargreaves Lansdown.
The euro traded at USD1.0653, slightly lower than USD1.0658.
Against the yen, the dollar was quoted at JPY148.04, up versus JPY147.38. The yen weakened after the Bank of Japan left its ultra-loose monetary policy in place, as was widely expected, and showed no sign of shifting its approach to monetary policy.
The BoJ said it voted unanimously to keep its negative interest rate of minus 0.1%, which was expected by the market, according to FXStreet-cited consensus. The bank said it would maintain its yield curve control range of plus or minus 0.5 percentage points of its target level for its 10-year Japanese government bonds.
The BoJ added it will "not hesitate to take additional easing measures if necessary".
Swissquote's Ipek Ozkardeskaya commented: "They didn’t even give a hint of normalization, meaning that the yen will hardly strengthen from the actual levels."
Shortly before the decision was announced, official data showed Japan's consumer price inflation was 3.1% in August, unchanged from July, and slightly higher than market estimates of 3.0%. Meanwhile, survey data showed a slight slowdown in the country's private sector activity during September, led by weaker growth in services.
The au Jibun Bank flash services purchasing managers' index fell to 53.3 points in September from 54.3 in August. The manufacturing downturn worsened slightly, with the sector's PMI falling to 48.6 from 49.6. The composite PMI, which measures both factory and service activity, fell to 51.8 from 52.6.
On Friday, the Nikkei 225 index in Tokyo was down 0.4%. In China, the Shanghai Composite was up 0.8%, while the Hang Seng index in Hong Kong was up 1.1%. The S&P/ASX 200 in Sydney was down 0.2%.
In the US on Thursday, Wall Street ended in the red, with the Dow Jones Industrial Average down 1.1%, the S&P 500 down 1.6% and the Nasdaq Composite down 1.8%.
"US stocks sold off sharply ever since the Fed delivered that hawkish interest rate pause on Wednesday...The market is falling because of fears over the impact of rising bond yields. The sell-off may need to extend further before investors find value in stocks, especially in growth equities," said Fawad Razaqzada, market analyst at City Index and Forex.com.
Gold was quoted at USD1,924.16 an ounce early Friday, higher than USD1,918.13 on Thursday. Brent oil was trading at USD93.86 a barrel, lower than USD94.17.
Friday's economic calendar has a slew of flash PMI readings, including the eurozone at 0900 BST, the UK at 0930 and the US at 1445 BST. There is also a UK retail sales reading at 0700 BST.
The local corporate calendar has half-year results from business-to-business media and events firm Ascential.
By Elizabeth Winter, Alliance News senior markets reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.
