LONDON MARKET COMMENT: More Bond Volatility Sets Shares For Weak Open

LONDON (Alliance News) - UK stocks are set to open lower on Thursday as volatility in global bond markets continues to depress equities.

IG says futures indicate the FTSE 100 to open 23.3 points lower at 6,926.3. The index closed up 0.2% at 6,949.63 on Wednesday following mixed economic data in Europe, the UK and US.

On Wall Street Wednesday, the DJIA and the S&P 500 both ended a touch lower, while the Nasdaq Composite gained 0.1%.

In Asia Thursday, the Nikkei 225 is down 1.0%, the Hang Seng trades up 0.1% and the Shanghai Composite is down 0.1%.

Recent sharp sell-offs in European and US bonds have sent yields higher and have weighed on stock markets and continue to put pressure ahead of the open Thursday.

"I think everyone expected yields to rise once we started to see a bounce in oil prices as, naturally, this would change people's inflation outlook. The pace at which they've risen has been quite surprising, which is probably a consequence of a lack of liquidity in the market at the moment," says Craig Erlam, senior market analyst at Oanda. "While we may still continue to see yields creep higher, I would say much of the aggressive moves are done for now, and we may even see bond markets correct a little."

In a busy UK corporate calendar, there are full-year results from FTSE 100 constituents 3i Group and British Land Co, while Aggreko, ITV, Old Mutual, and Merlin Entertainments release interim management statements. Vedanta Resources and TalkTalk Telecom Group report full-year results, while Mitchells & Butlers, Grainger, Marston's and Euromoney Institutional Investor provide half-year results.

The economic calendar is lighter Thursday with no UK releases. The US producer price index is at 1330 BST, along with initial and continuing jobless claims. US EIA natural gas stocks are at 1530 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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