(Alliance News) - Stocks in London are set to end a difficult week on a downbeat note after economic data raised the prospect of the Federal Reserve acting even more aggressively to tame inflation.
Attention now lies on UK retail sales, due at 0700 BST, to gauge the resilience of consumers amid the cost-of-living crisis.
Retail sales are expected to fall 0.5% month-on-month in August, according to FXStreet, reversing 0.3% growth in July.
Sterling was quoted at USD1.1455 early Friday, down from USD1.1494 at the London equities close on Thursday. After hitting a high of USD1.1738 during the week, the pound has tumbled nearly 2.5%.
IG says futures indicate the FTSE 100 index of large-caps to open down 37.97 points, or 0.5%, at 7,244.10 on Friday. The FTSE 100 closed up 4.77 points, or 0.1%, at 7,282.07 on Thursday.
"Improvements in US weekly jobless claims data, along with this week's hotter-than-expected core inflation numbers appear to be prompting investors to hedge their bets over the prospect that the Federal Reserve might be tempted to raise rates next week by 100bps," said Michael Hewson, chief markets analyst at CMC Markets.
"Concerns about a global recession are also growing, manifesting themselves by way of weakness in commodity prices, crude oil prices slumping by over 3% yesterday, while natural gas prices on both sides of the Atlantic also plunged sharply."
Oil prices were recovering a touch on Friday, but Brent crude remained well below the high of the week in excess of USD95 a barrel. Brent oil was trading at USD91.24 a barrel early Friday, up from USD90.04 late Thursday.
Unable to take away global recession fears were some strong economic figures from China early Friday.
The National Bureau of Statistics said retail sales in China increased 5.4% annually in August, beating an FXStreet cited forecast of a 3.5% climb. Retail sales growth quickened from a 2.7% rise in July.
China's industrial output improved 4.2% year-on-year in August, topping a market forecast of 3.8% growth, according to FXStreet. Industrial production had risen 3.8% yearly in July.
Instead of reacting positively to the data, Asian stocks were following a shaky handover from New York. In China, the Shanghai Composite was down 1.5% on Friday, while the Hang Seng index in Hong Kong was down 0.7%. The Nikkei 225 index in Tokyo was down 1.0% and the S&P/ASX 200 in Sydney down 1.3%.
In the US on Thursday, the Dow Jones Industrial Average closed down 0.6%, the S&P 500 down 1.1% and the Nasdaq Composite down 1.4%
The euro traded at USD0.9986 early Friday in London, lower than USD0.9996 late Thursday. Against the yen, the dollar was quoted at JPY143.42 versus JPY143.36.
Gold was quoted at USD1,663.41 an ounce early Friday, down from USD1,667.03 on Thursday.
In the economic calendar, there is the consumer price index from the eurozone at 1000 BST, after the UK retail sales print.
In Friday's UK corporate calendar, there are half-year results from Dunedin Enterprise Investment Trust and full-year result from Pacific Horizon Investment Trust.
By Lucy Heming; lucyheming@alliancenews.com
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