(Alliance News) - Stocks in London are set to open lower on Thursday, ahead of the Bank of England's latest interest rate decisions, where markets are expecting the central bank to follow in the US Federal Reserves footsteps.
IG says futures indicate the FTSE 100 to open down 23.5 points, 0.3%, at 7,617.07 on Thursday. The index of London large-caps closed down 35.74 points, 0.5%, at 7,630.57 on Wednesday.
"US markets also ended what was a strong month very much on a downswing, with the S&P500 posting its biggest one day fall since September, after the Federal Reserve kept rates unchanged, but in the statement came out less dovish than had been expected, with Fed chair Jay Powell leaning against the idea of a March rate cut during the ensuing press conference," said Michael Hewson at CMC Markets.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.8%, the S&P 500 down 1.6% and the Nasdaq Composite down 2.2%.
The Federal Reserve on Wednesday dented hopes for an easing in monetary policy as early as March after voting to leave interest rates unchanged.
At the conclusion of its two-day meeting, the Federal Open Market Committee unanimously voted not to raise the fed funds rate, for the fourth meeting in a row. The key rate is targeted in a range between 5.25%-5.5%, the highest in nearly 23 years.
But the US central bank disappointed those who hoped for a clear indication that interest rates would be lowered at its next meeting in March.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," it said in a statement.
It is the Bank of England's turn on Thursday. The interest rate decision will be announced at 1200 GMT. Alongside the decision, there will also be the BoE's latest monetary policy report, with economic projections, as well as a press conference with Governor Andrew Bailey half an hour later.
Like the Fed, the BoE is expected to keep rates unchanged and the focus will be on messages about future policy decisions.
In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was down 0.6%.
China's manufacturing sector continued to grow at the beginning of 2024, survey data showed.
The Caixin purchasing managers' index was unchanged at 50.8 points in January, coming in above the 50-point no change mark, which indicates a modest expansion.
"Both supply and demand expanded, with supply outpacing demand. Market sentiment continued to improve with manufacturing output growing for the fifth time in the past six months. The subindex for total new orders remained in expansionary territory for six consecutive months. Overseas demand picked up slightly with new export orders expanding for the first time in seven months," said Caixin senior economist Wang Zhe.
In Japan on Thursday, the Nikkei 225 index in Tokyo was down 0.8%.
Japanese factories suffered another contraction in January, with the au Jibun Bank manufacturing PMI coming in at 48.0. This was a slight increase from 47.9 in December, meaning the pace of contraction slowed.
S&P Global's Usamah Bhatti said: "Depressed economic conditions at home and globally weighed heavily on the sector, as both output and new orders were scaled back further, with the decline in the latter remaining notably sharp."
The S&P/ASX 200 in Sydney closed down 1.2%.
Australia's manufacturing activity stabilised in January, with the Judo Bank PMI rising to 50.1 from 47.6 in December.
Sterling was quoted at USD1.2670 early Thursday, lower than USD1.2715 at the London equities close on Wednesday. The euro traded at USD1.0801 early Thursday, lower than USD1.0846 late Wednesday.
Against the yen, the dollar was quoted at JPY146.85, up versus JPY146.29.
Gold was quoted at USD2,043.09 an ounce early Thursday, lower than USD2,050.57 on Wednesday. Brent oil was trading at USD80.62 a barrel early Thursday, lower than USD81.03 late Wednesday.
In Thursday's UK corporate calendar, Shell posts its full-year results, while trading statements are released by BT and Glencore.
The economic calendar has a slew of manufacturing PMIs released, as well as consumer price inflation data for the eurozone.
By Sophie Rose, Alliance News senior reporter
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