(Alliance News) - Stock prices in London are seen opening marginally higher on Thursday despite sharp declines by Asian equity markets, as investors await an interest rate decision from the European Central Bank in the afternoon.
IG futures indicate the FTSE 100 index is to open 5.23 points higher at 7,258.50. The blue-chip index closed down 24.35 points, or 0.3%, at 7,253.27 Wednesday.
"European markets underwent a modest pullback yesterday with modest losses across the board; however there was little in the price action to suggest that the declines were anything other than a brief pause in the overall move higher, with shares set to open unchanged later this morning, despite a sell-off in Asia markets," said CMC Markets analyst Michael Hewson.
The euro was priced at USD1.1603, up from USD1.1592 ahead of the ECB rate decision. The central bank is widely expected to keep interest rates unchanged.
The ECB Governing Council meets in Frankfurt, announcing its latest policy decision at 1245 BST on Thursday. This will be followed by a press conference with President Christine Lagarde at 1330 BST.
Fears over rising inflation and pressure on central banks to tighten monetary policy sent markets in Asia lower, as investors contemplate the end of the era of cheap cash, amid a spike in Covid infections.
The Bank of Canada on Wednesday said it would end its vast bond-buying programme and flagged an interest rate hike earlier in 2022 than previously envisaged.
The Japanese Nikkei 225 index was down 0.8%. In China, the Shanghai Composite was down 1.0%, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney slipped 0.3%.
Against the Japanese yen, the dollar was trading at JPY113.55 in London, down from JPY113.80 late Wednesday.
The Bank of Japan on Thursday announced its decision by an 8-1 majority vote to keep its key interest rate at negative 0.1%.
In addition, the central bank said that it would keep its loose monetary policy unchanged, choosing to continue expanding the monetary base until the annual rate of increase in the consumer price index exceeds 2% and remains above the target "in a stable manner".
The BoJ noted that the pandemic has continued to weigh on Japan's economy, to the point that it has lowered its growth forecast for the year ending March 2022 to 3.4% growth, compared to the previous guidance of 3.8%.
However, reflecting a more positive longer-term outlook, the BoJ lifted up its growth forecast for the year to March 2023 to 2.9% from a prior estimate of 2.7%.
"The Bank of Canada yesterday ended its own bond buying program, while there is speculation that the RBA could do the same next week, while the Bank of England could also to act to nudge rates higher by the end of this year. The only two central banks who don't look anywhere near calling to a halt to their own emergency programs are the Bank of Japan, who met earlier today, and the European Central Bank, who are due to announce their decision later, although there aren't any surprises expected," noted CMC's Hewson.
In the US on Wednesday, Wall Street ended mostly lower, with the Dow Jones Industrial Average down 0.7% and S&P 500 down 0.5%, but the Nasdaq Composite finished marginally higher.
The pound was quoted at USD1.3740 early Thursday, up from USD1.3726 at the London equities close Wednesday.
Brent oil was quoted a USD83.08 a barrel Thursday morning, down sharply from USD85.32 late Wednesday. Gold stood at USD1,801.52 an ounce, higher against USD1,792.13.
The UK corporate calendar on Thursday has third-quarter results from oil major Royal Dutch Shell, Lloyds Banking, and builders' merchant Travis Perkins. Trading statements are due from advertising firm WPP and packaging company DS Smith.
Thursday's economic calendar has German unemployment at 0855 BST and inflation at 1300 BST, while US GDP and the latest initial jobless claims numbers are at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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