(Alliance News) - Stocks in London are set to open lower on Thursday as markets take a breather from the week's rally ahead of a European Central Bank decision later in the day.
IG says futures indicate the FTSE 100 index of large-caps to open 7.81 points lower at 6,374.60 on Thursday. The FTSE 100 index closed up 162.27 points, or 2.6%, at 6,382.41 on Wednesday - bringing its week-to-date gain to 5%.
"I do not think you can fault investors for taking some risk off the table ahead of the enormous risk events of the week, today's ECB meeting and Friday's NFP," said Stephen Innes, chief global markets strategist at AxiCorp, referring to the US non-farm payrolls report.
The European Central Bank will release its latest monetary policy decision at 1245 BST on Thursday, followed by a press conference with President Christine Lagarde.
The ECB is widely expected to increase its EUR750 billion pandemic emergency purchase programme by EUR500 billion as it reveals a downbeat set of macroeconomic projections.
"Expanding central bank balance sheets and effective forward guidance has been crucial in supporting equity market gains, optimism over the EU recovery fund proposal has also helped. The consensus expectation is for a EUR500 billion expansion of the PEPP today. A failure to increase asset purchases is unlikely but would stem the rally in EURUSD in the near term and cap recent gains stocks," Innes said.
The euro traded at USD1.1219 ahead of the meeting, soft against USD1.1223 late Wednesday.
Germany's governing parties have agreed to a stimulus package worth EUR130 billion to help the country's economy recover from the coronavirus pandemic, Chancellor Angela Merkel said late Wednesday after two days of marathon talks.
The raft of measures include billions in aid for struggling industries; additional funding for municipalities as they deal with growing unemployment and lost tax revenue; and a one-time EUR300 per child bonus, to be paid out along with other child benefits.
Merkel said drastic spending was needed in order to "to give the next generations a future".
The total value agreed to in the 21 hours of talks exceeded expectations. Previous reporting said the parties were looking at measures totalling around EUR80 billion.
In the US on Wednesday, Wall Street ended in the green, with the Dow Jones Industrial Average up 2.1%, the S&P 500 up 1.4% and Nasdaq Composite up 0.8%.
In Asia on Thursday, the Japanese Nikkei 225 index is up 0.5%. In China, the Shanghai Composite is down 0.2%, while the Hang Seng index in Hong Kong is flat. Â
Against the yen, the dollar was quoted at JPY109.06, firm versus JPY108.95 on Wednesday.
Gold was quoted at USD1,702.37 an ounce early Thursday, higher than USD1,697.55 on Wednesday. Brent oil was trading at USD39.22 a barrel, soft on USD39.52 late Wednesday.
Sterling was quoted at USD1.2541 early Thursday, lower than USD1.2604 at the London equities close on Wednesday.
UK Prime Minister Boris Johnson braced the nation dealing with a coronavirus death toll of more than 50,000 for "many job losses" as further details of the economic impact of the pandemic were set to emerge.
He said the government would take an "interventionist" approach to support the economy as it emerges from the lockdown.
On Thursday, the Commons business committee will hear more on the impact of coronavirus on businesses and workers, while the Bank of England will publish a list of companies which receive funding through its Covid Corporate Financing Facility lending scheme.
Meanwhile, ministers are likely to face further questions over their decision to end virtual voting in the Commons after Business Secretary Alok Sharma, who appeared visibly ill while in the chamber on Wednesday, was tested for Covid-19.
In the economic calendar on Thursday, there are eurozone retail sales at 1000 BST. US initial jobless claims are at 1330 BST with the trade balance due at the same time.
The UK corporate calendar for Thursday has a trading statement from online trading firm IG Group and full-year results from water firm Pennon Group.
After the market close on Wednesday, FTSE Russell revealed Centrica, Carnival, Meggitt and easyJet all will be kicked out of the FTSE 100 from June 22 to be replaced by Avast, GVC Holdings, Homeserve and Kingfisher.
By Lucy Heming; lucyheming@alliancenews.com
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