(Alliance News) - Stocks in London were set to open marginally lower on Thursday after major central bank chiefs struck a resolutely hawkish tone at an event hosted by the European Central Bank on Wednesday.
IG says futures indicate the FTSE 100 to open 2.79 points lower on Thursday at 7,497.70. The index closed 39.03 points higher, or 0.5%, at 7,500.49 on Wednesday.
"The major central bankers' speeches were the same background music. The Federal Reserve's [Jerome] Powell, the Bank of England's [Andrew] Bailey, and the European Central Bank's [Christine] Lagarde agreed that their fight against inflation wasn't done yet, and that more rate hikes are in the pipeline," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Powell told the event in Sintra, Portugal that the US central bank is leaving open the possibility of consecutive interest rate hikes in the months ahead.
The Fed recently paused its cycle of rate increases after 10 consecutive hikes, to give policymakers more time to weigh the effects of past moves on inflation.
However, Powell told ECB's central banking conference that the Fed believes there's "more restriction coming".
"Policy hasn't been restrictive enough for long enough," he added.
Powell's hawkishness helped boost the dollar on Thursday morning in London.
Sterling was quoted at USD1.2625, down from USD1.2741 at the London equities close on Wednesday. The euro traded at USD1.0893, down from USD1.0916 late Wednesday.
Against the yen, the dollar was quoted at JPY144.54, higher than JPY144.22 on Wednesday.
In New York on Wednesday, stock indices ended narrowly mixed. The Dow Jones Industrial Average closed down 0.2%, the S&P 500 flat and the Nasdaq Composite up 0.3%.
All major banks in the US have passed the Fed's annual stress test, designed to assess how well they would fare in a major financial crisis.
The Fed said on Wednesday that all 23 banks tested "are well positioned to weather a severe recession and continue to lend to households and businesses even during a severe recession".
The latest test results follow widespread banking turbulence in the US and Europe earlier this year, sparked by the rapid collapse of Californian regional lender Silicon Valley Bank.
In Tokyo on Thursday, the Nikkei 225 index was up 0.4%. In China, the Shanghai Composite was down 0.2%, while the Hang Seng index in Hong Kong was down 1.5%. The S&P/ASX 200 in Sydney was flat.
Gold was quoted at USD1,903.94 an ounce early Thursday, lower than USD1,910.97 on Wednesday. Brent oil was trading at USD73.72 a barrel, down from USD74.05 late Wednesday.
In Thursday's corporate calendar, there are full-year results from De La Rue and Moonpig, as well as trading statements from B&M European Value Retail and Hunting.
The economic calendar has a US gross domestic product reading and the latest jobless claims data at 1330 BST. There is a German inflation reading at 1300 BST.
By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.
