(Alliance News) - Stocks in London are set to open lower on Thursday, taking their cue from stocks on Wall Street which fell after the US Federal Reserve failed to please some investors - and Donald Trump - with the extent of its rate cut.
The monetary policy focus now moves to the Bank of England, which releases its own interest rate decision at midday.
IG says futures indicate the FTSE 100 index of large-caps to open 7.48 points lower at 7,579.30 on Thursday. The FTSE 100 index closed down 59.99 points, or 0.8%, at 7,586.78 on Wednesday.
The US Federal Reserve on Wednesday lowered the target range for interest rates by a quarter point - the first cut in just over a decade - bringing the benchmark rate down to 2.00% to 2.25%.
Federal Reserve Chair Jerome Powell said the reason behind the cut was to sustain the expansion of the US economy, which is growing at an annualized rate of about 2%. He explained that Wednesday's decision should be viewed as a "mid-cycle adjustment to policy" not the beginning of a long series of rate cuts.
The rate cut was not enough to please President Donald Trump, who criticized Powell for not going further. "As usual, Powell let us down," Trump said.
"All of those who were expecting the Fed to do more ended up disappointed, which given how strong some of the recent US data has been recently really shouldn't have been a surprise to anybody. If anything it was the least the Fed could have done without getting an even bigger negative market reaction," said Michael Hewson, chief market analyst at CMC Markets.
"Nonetheless US markets threw a tantrum, slipping back sharply, with the Dow posting its worst one day fall since May, while short term bond yields, and the US dollar both pushed higher," he said.
Wall Street ended firmly in the red on Wednesday, with the Dow Jones Industrial Average ending down 1.2%, the S&P 500 down 1.1% and Nasdaq Composite sliding 1.2%.
Significantly, Hewson added, the decision was not unanimous, with two rate-setters dissenting.
With the Fed's interest rate decision now known, focus now turns elsewhere to the next central bank meeting in the calendar - the Bank of England.
No change is expected from the BoE when the UK central bank releases its latest monetary policy decision at midday, though attention will be paid to Governor Mark Carney at the following press conference, at 1230 BST, for clues as to what the bank could do if the UK crashes out of the EU with no deal.
Sterling was quoted at USD1.2127 early Thursday ahead of the decision, down from USD1.2222 at the London equities close on Wednesday.
"Although a BoE rate cut is unimaginable right now, the heavy sell-off in sterling could invigorate the BoE hawks. And if Boris Johnson lets the pound fall free, then Mark Carney may have no choice but to open the parachute," commented Ipek Ozkardeskaya at London Capital Group.
In Asia on Thursday, the Japanese Nikkei 225 index is down 0.1%. In China, the Shanghai Composite is down 0.8%, while the Hang Seng index in Hong Kong is also 0.8% lower.
Outside of the BoE, the economic events calendar on Thursday has manufacturing PMI readings France at 0850 BST, Germany at 0855 BST, the eurozone at 0900 BST and the UK at 0930 BST.
The UK corporate calendar on Thursday has interim results from oil major Royal Dutch Shell, tobacco giant British American Tobacco, paper and packaging firm Mondi, miner Rio Tinto, insurer RSA Insurance Group, fund manager Schroders, stock exchange operator London Stock Exchange Group and from banks Barclays and Standard Chartered.
