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LONDON (Alliance News) - UK stocks are set to open marginally higher Thursday despite the US Federal Reserve ended its quantitative easing programme on Wednesday, as the markets re-focus on corporate earnings, as well as some key economic data to come later in the session.
Futures indicate that the FTSE 100 will open 10 points higher at 6,465.
As expected, the Federal Reserve late Wednesday announced a final taper of its quantitative easing programme, reducing new purchases of Treasurys and mortgage-back securities to zero from USD15 billion. Policy makers repeated their pledge to keep interest rates around their record lows for "a considerable time," but said interest rates may rise sooner than markets expect if the economic recovery continues to gather steam.
The release from the US central bank has been seen as more hawkish than expected, with the statement setting out a more optimistic view of the economy than investors had been prepared for, especially given recent comments from St. Louis Fed President James Bullard that the end of QE could potentially be delayed.
The hawish tone was evidence by the move in the US dollar, which rallied strongly against other major currencies. The euro fell to a three week low of USD1.2584, while the pound fell to a two week low of USD1.5916.
US Equity markets reacted relatively calmly to the expected taper, and the DJIA, S&P 500, and Nasdaq Composite all went on to close between just 0.1% and 0.3% lower. A mixed Asian session has seen the Nikkei close up 0.7%, while the Hang Seng continues down 0.6%, and the Shanghai Composite is up 0.5%.
The US economy will remain in focus Thursday, with the preliminary reading of third quarter GDP from the world's biggest economy due for release at 1230 GMT. US jobless claims and personal consumption data will be released at the same time.
Much like in the UK, growth of the US economy is expected to slowed slightly over the last three months to 1.4%, which would be down from the 2.1% growth recorded in the second quarter. On an annualised basis, growth is expected to have slowed to 3.0% in the third quarter from 4.6% in the second quarter.
Fed Chair Janet Yellen also speaks Thursday on the subject of 'Diversity in the Economics Profession' from Washington at 1300 BST.
The German economy also will be in focus throughout the day, with unemployment data due at 0855 GMT, followed by inflation data at 1300 GMT. The German unemployment rate is expected to remain unchanged at 6.7% in October. However, while the labour market remains one of the most healthy in Europe, it is slowing prices within the economy that are causing concerns.
Economists are expecting that consumer prices went into reverse in October, with a monthly fall of 0.1% in German CPI expected. Annually, prices are seen as accelerating very slightly, with a year-on-year print of 0.9% expected, which would be up from 0.8% in September.
Ahead of all the economic data to come, UK investors will be focused on the corporate earnings already released Thursday, with third quarter numbers out from Aviva, National Express Group, St James' Place, and Royal Dutch Shell. BT Group has put out half-year numbers. Kazakhmys has released a production report.
Barclays has reported an adjusted pretax profit for the first nine months of GBP4.94 billion, up from GBP4.72 billion last year and ahead of expectations. The bank has made an additional provision of GBP170 million for the payment of payment protection insurance claims, and made a GBP500 million provision for the investigation into its foreign exchange scandal.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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