LONDON (Alliance News) - UK stocks are set to open higher Thursday following an exceptionally strong day on Wall Street and continued stimulus measures by the Chinese central bank.
IG says futures indicate the FTSE 100 to open higher at 6,089.3 points. The index ended down 1.7% at 5,979.20 points on Wednesday, after its rebound at the US open lost momentum.
Wall Street managed to hold onto its strong gains Wednesday, with the DJIA closing up 4.0%, the S&P 500 ending up 3.9% and the Nasdaq Composite closing up 4.2%. It was the biggest one-day gain for the Dow since 2011 and snaps a run of six consecutive losses.
The recent fall in global stock prices have been sparked by ongoing concerns about the Chinese economy and volatility in its stock markets. On Tuesday, the People's Bank of China cut its key interest rates and reserve ratio in an effort to stem heavy losses in its stock market and support its slowing economy. On Wednesday China's central bank injected CNY140 billion into the financial system through its short-term liquidity operations facility.
"The combined effort of these two stimulus measures appears to have brought some stability to Chinese markets for now, and the Shanghai Composite is actually on course to record its first gains since last Wednesday," says Craig Erlam, senior market analyst at Oanda. "Of course, as we've seen repeatedly and not just in China, these gains can be rapidly reversed and investor behaviour into the close today will tell us a lot about just how much anxiety there still is."
True to form, the Shanghai Composite has lost all its earlier gains ahead of the London open and now trades down 0.6%. The Japanese Nikkei 225 closed up 1.1% and the Hang Seng in Hong Kong is up 1.6%.
Meanwhile, New York Federal Reserve President William Dudley said Wednesday in New York that a rate hike next month "seem less compelling to me [now] than it was a few weeks ago". Nevertheless, as US Fed Chair Janet Yellen has said before, Dudley said that he expects the US central bank to raise rates this year, and repeated that moves on monetary policy remain "data-dependent".
Investors will now be looking ahead to the Jackson Hole Symposium starting later Thursday, where other key Fed officials, as well as others, will be speaking. However, Fed Chair Janet Yellen is not expected to attend.
Lloyds Bank believes Yellen's absence means the symposium is an unlikely venue for the Fed to explicitly signal its policy intentions in advance of the September Federal Open Market Committee meeting, but comments from other attending Fed speakers still will be closely watched.
"With global downside risks pertaining to China appearing to crystallise and market pricing accordingly paring back the probability attached to a September lift-off from the FOMC, especially following yesterday?s comments from NY Fed President Dudley, any indication that the Fed is still inclined to look through the recent volatility would come as a sharp surprise," Lloyds says.
On the London Stock Exchange, Irish building materials company CRH said its pretax profit for the first half rose slightly, held back by the cost of a bond repayment, but its earnings and revenue both surged, boosted by the weak euro, and it said it has struck a USD1.3 billion deal to acquire US group CR Laurence Co Inc.
The FTSE 100 company said its pretax profit for the first half to the end of June was EUR63.0 million, compared to EUR61.0 million a year earlier. The pretax figure was held back by a EUR38.0 million charge the company booked related to an early bond redemption during the half.
Advertising and marketing group WPP said its J Walter Thompson Australia arm has acquired a majority stake in Webling Interactive for an undisclosed sum. WPP said Webling is a Sydney-based digital agency which counts the likes of American Expresss and Coca-Cola amongst its clients.
Amec Foster Wheeler reported a dip in pretax profit in the first half of 2015 as market conditions remained challenging, but the company said it is confident it can meet full-year expectations.
The oil and gas services company reported a GBP73.0 million pretax profit in the six months to June 30, falling from a GBP83.0 million profit a year earlier, as revenue rose to GBP2.66 billion from GBP1.85 billion. However, scope revenue, which is revenue less pass-through procurement revenue, fell to GBP2.58 billion from GBP2.61 billion.
In the economic calendar, German import prices and UK Nationwide housing prices are due at 0700 BST. In the US, alongside the start of Jackson Hole symposium, there are initial and continuing jobless claims and the Gross Domestic Product Price Index at 1330 BST. US pending home sales are due at 1500 BST, while Energy Information Administration natural gas storage is at 1530 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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