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LONDON (Alliance News) - UK stocks are set to open slightly higher Friday but remain under pressure after oil prices fell to a fresh six and a half year low.
IG says futures indicate the FTSE 100 to open higher at 6,570.4. The index closed flat at 6,568.33 on Thursday getting an early boost after the Chinese central bank said it expects no further depreciation in the yuan, but the gains tailed off in late trade after a rise in the dollar pushed down commodities prices.
West Texas Intermediate fell to a new six and a half year low on Thursday at USD41.65 a barrel, while Brent oil hit a low of USD48.82 a barrel. Ahead of the open Friday WTI is at USD41.99 and Brent oil is at USD49.54.
The sharp plunge came after official data from the Energy Information Administration showed crude stockpiles in the US to have declined last week, but by less than expected. A weekly report from the US Energy Information Administration on Wednesday showed US crude oil inventories declined 1.7 million barrels in the week ended August 7, while analysts expected a decline of 1.9 million barrels.
On Wall Street Thursday, the DJIA closed flat, the S&P 500 ended down 0.1% and the Nasdaq Composite closed down 0.2%.
In Asia Friday, the Japanese Nikkei is down 0.4%, the Hang Seng trades flat and the Shanghai Composite is up 0.5%.
After a three-day slide that sent shockwaves through global markets, China's yuan rose slightly against the US dollar Friday. China's central bank set its daily reference rate at 6.3975 to the dollar, compared to 6.4010 on Thursday, its third consecutive devaluation. On Tuesday the People's Bank of China cut the rate by 1.9%, followed by a 1.6% drop on Wednesday and a further 1.1% drop on Thursday, prompting share price falls across the globe. Ahead of the London open the dollar trades at CNY6.3903.
On Thursday, the People's Bank of China Assistant Governor Zhang Xiaohui eased market concerns by saying the yuan depreciation is unlikely to continue, given strong economic fundamentals of the country. The market-oriented exchange rate formation mechanism is more conducive to long-term stability, Yi said, adding that the flexible exchange rate will increase the central bank's monetary policy independence.
In the economic calendar there are German GDP data at 0700 BST, and eurozone inflation and GDP data at 1000 BST. In the afternoon, there are the US producer price index at 1330 BST and capacity utilisation at 1415 BST, alongside US industrial production.
In the UK corporate calendar, there are half-year results from Finland-based chrome producer Afarak Group and biopharmaceutical company Biofrontera.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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