LONDON (Alliance News) - Stocks in London on Thursday are on course to open broadly unchanged following substantial gains in the previous session, after the US central bank pledged to be patient in making interest rate hikes.
A busy UK corporate calendar on Thursday has full-year results from oil major Royal Dutch Shell and consumer goods maker Unilever. There are also half-year results from distiller Diageo and third-quarter results from telecommunications firm BT Group.
IG says futures indicate the FTSE 100 index of large-caps to open 2.97 points higher at 6,944.60 on Thursday. The FTSE 100 index closed up 107.70 points, or 1.6%, at 6,941.63 on Wednesday.
"January's Fed meeting was a highly anticipated event, more so than usual because of the volatility in markets. And it didn't disappoint. The market finally saw the U-turn in monetary policy that it had been waiting for," said Jasper Lawler, head of research at London Capital Group.
He explained: "Across the end of last year, the markets had grown increasingly nervous that the Fed was on the cusp of a big policy error by remaining on its hiking path despite growing signs of weakness in the global economy. As a result, stocks dropped heavily fearing that higher borrowing costs would damage the economy at a time when global growth was also slowing."
Departing from the hawkish approach to rate hikes expressed by the US Federal Reserve over the majority of 2018, the central bank kept its benchmark interest rate unchanged at its first meeting of 2019, vowing to be "patient" regarding future adjustments.
The Fed did not indicate any future plans to raise interest rates, striking a cautious tone as it held the rate's target range at 2.25 to 2.50%.
The accompanying statement included some notable changes from last month, including dropping a reference to the Fed's plan for further gradual rate increases.
The central bank also removed a sentence describing the risks to the economic outlook as "roughly balanced". This was a change of its previous messaging in 2018, and a sign of a more dovish approach to policy.
In the US on Wednesday following the Fed decision, Wall Street finished firmly in the green, with the Dow Jones Industrial Average ending up 1.8%, the S&P 500 up 1.6% and Nasdaq Composite up 2.2%.
Among a raft of US companies reporting on Wednesday, social media giant Facebook posted strong financial results for its fourth quarter and full year despite questions over the company's privacy practices.
Net income jumped 61% to USD6.8 billion compared with the 2017 quarter, while revenue grew to USD16.9 billion, or 30%. The number of daily active users was 1.52 billion, an increase of 9% over 2017.
Meanwhile, software firm Microsoft said its cloud business increased 20% in the fourth quarter of 2018.
The growth of Microsoft's cloud business and its decision to work across multiple operating systems delivered for its bottomline, helping fourth-quarter operating income to rise 18% to USD10.3 billion and overall revenue 12% to USD32.5 billion.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 1.1%. In China, the Shanghai Composite is up 0.1%, while the Hang Seng index in Hong Kong is up 0.9%.
China's manufacturing activity improved slightly in January, official data showed overnight, as the world's second largest economy feels the effects of a prolonged trade war with the US.
The manufacturing purchasing managers index came in at 49.5 in January, edging up from 49.4% in December, the National Bureau of Statistics said.
The indicator fell below the critical threshold of 50 last month, for the first time in two years. A figure below 50 indicates contraction.
The second month of manufacturing contraction comes as a high-ranking Chinese delegation met with US representatives on Wednesday for trade talks expected to be made more complicated by the recent US judicial moves against tech giant Huawei.
The sides have about a month to reach a deal before a deadline which will see the US impose a new set of tariffs on China.
US Commerce Secretary Wilbur Ross last week indicated the gaps were still "miles and miles" wide. However, Mnuchin on Tuesday said he expected "significant progress" on core issues, including forced technology transfers and market access.
To come in the economic events calendar on Thursday are German unemployment figures at 0855 GMT and Italian and eurozone GDP readings at 0900 GMT and 1000 GMT respectively.
