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(Alliance News) - Stocks in London were set to open lower on Thursday as hopes evaporated that aggressive interest rate hikes by central banks may soon come to an end.
IG says futures indicate the FTSE 100 index of large-caps to open 37.7 points lower, or 0.5%, at 7,793.00 on Thursday. The FTSE 100 index closed down 20.33 points, or 0.3%, at 7,830.70 on Wednesday.
A report from the Office for National Statistics on Wednesday showed the UK consumer price index rose by 10.5% in December from a year before, the annual pace of inflation easing from 10.7% in November.
Core inflation, which excludes energy, food, alcohol, and tobacco, remained unchanged a 6.3%, however.
The print suggested that price inflation in the UK is proving to be stubborn, leaving intact expectations that the Bank of England will lift interest rates again by 50 basis points in February.
Sterling was quoted at USD1.2342 early on Thursday, lower than USD1.2366 at the London equities close on Wednesday.
The euro traded at USD1.0799 early Thursday, lower than USD1.0820 late Wednesday. Against the yen, the dollar was quoted at JPY127.86, lower versus JPY128.49.
In the US on Wednesday, Wall Street ended in the red, with the Dow Jones Industrial Average down 1.8%, the S&P 500 down 1.6% and the Nasdaq Composite down 1.2%.
Stock prices in New York were hurt by poor retail sales data on Wednesday damping hopes of a soft-landing for the US economy in the face of Federal Reserve rate hikes.
Further, St Louis Fed President James Bullard said US monetary policymakers should get the key interest rate to above 5% as quickly as possible, Reuters reported on Wednesday.
Only then should the Fed pause rate hikes, Bullard suggested.
Bullard said the Fed's decisions to turbocharge rate hikes, by enacting lifts of 75 and 50 basis points, has been a success and should continue for now.
In Tokyo on Thursday, the Nikkei 225 stock index closed down 1.4%.
Japan logged its largest-ever annual trade deficit last year. The resource-poor country is heavily dependent on imported fossil fuels, which became sharply more expensive last year, largely due to Russia's invasion of Ukraine.
In 2022, the value of imports was JPY19.97 trillion, or USD155 billion, higher than exports – Japan's largest-ever deficit. Comparable data has been available since 1979.
The reading also marked a jump from Japan's previous record trade deficit of JPY12.82 trillion in 2014.
In China, the Shanghai Composite was up 0.4% on Thursday, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney closed up 0.6%.
Gold was quoted at USD1,910.19 an ounce early Thursday, up against USD1,908.93 on Wednesday. Brent oil was trading at USD84.08 a barrel, down against USD87.16.
Stephen Innes at SPI Asset Management explained that oil is trading lower due to the broad-based economic weakness in the US data on Wednesday.
"Even the resilience of the US consumer may finally be buckling under the Fed rake hike pressure as the broad-based decline in retail sales suggest US consumers are cutting back across the board," he said.
In Thursday's UK corporate calendar, there are trading statements home furnishings retailer Dunelm, fast fashion firm boohoo, and food delivery service Deliveroo.
Already out, BHP kept its production guidance for financial year 2023 unchanged.
Looking at demand, the miner said: "BHP believes China will be a stabilising force when it comes to commodity demand in the 2023 calendar year, with OECD nations experiencing economic headwinds. China's pro-growth policies, including in the property sector, and an easing of COVID-19 restrictions are expected to support progressive improvement from the difficult economic conditions of the first half. China is expected to achieve its fifth straight year of over 1 billion tonnes of steel production."
The economic calendar has the latest US initial jobless claims reading at 1330 GMT.
By Heather Rydings, Alliance News senior economics reporter
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