(Alliance News) - Stock prices in London are seen opening lower on Friday in the wake of the stimulus plan announced by the incoming Biden administration, as focus now shifts to the plan being passed into law.
IG futures indicate the FTSE 100 index is to open 30.76 points lower at 6,771.20. The blue-chip index closed up 56.44 points, or 0.8%, at 6,801.96 Thursday.
US President-elect Joe Biden will propose injecting USD1.9 trillion into the economy when he takes office next week, as evidence mounts that the recovery from the sharp downturn caused by Covid-19 is flagging.
Dubbed the American Rescue Plan, the proposal released Thursday includes a host of measures aimed at revitalizing the world's largest economy.
The plans include an extra USD1,400 cash handout for individuals - to top up the USD600 in last month's stimulus - a hike in the minimum wage to USD15 an hour, and billions of dollars to ramp up vaccinations so that 100 million are administered in 100 days.
Top Senate Democrat Chuck Schumer and House Speaker Nancy Pelosi embraced Biden's plan, vowing to put it before lawmakers.
In the US on Thursday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2%, S&P 500 down 0.4% and Nasdaq Composite down 0.1%.
The Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite is up 0.1%, while the Hang Seng index in Hong Kong is down 0.1%.
"Seems like this was already priced in, at least as far as magnitude," said Ilya Spivak, analyst at DailyFX. "The main question is how much of it gets compromised away to get it passed. That is probably the next layer of speculative uncertainty that markets are focused on. Hence the muted response."
Meanwhile, the US could see a boost of "exuberant spending" after the pandemic that causes price increases, but that may not lead to a spike in inflation, US Federal Reserve Chair Jerome Powell said on Thursday.
"As the pandemic recedes and we see potentially a strong wave of spending as people return to their normal lives and begin consuming various services, there could be quite exuberant spending and we could see some upward pressure on prices," Powell said during a talk hosted by Princeton University.
The Fed last year unveiled a new inflation targeting policy that will keep interest rates at zero for an extended period, and allow inflation to rise beyond 2.0% for a time in an effort to promote full employment.
Powell did not predict a post-pandemic consumer spending spree would lead to meaningfully higher inflation, but said if that did happen, the central bank is prepared.
The pound was quoted at USD1.3670 on Friday morning, lower from USD1.3681 at the London equities close Thursday.
The euro stood at USD1.2140, slightly lower from USD1.2145. Against the yen, the dollar was trading at JPY103.74, flat from JPY103.72.
Brent oil was trading at USD55.75 a barrel, firm from USD55.69 a barrel at the London equities close Thursday. Gold was priced at USD1,849.74 an ounce, higher than USD1,847.36.
The UK corporate calendar for Friday has trading statements from emerging markets asset manager Ashmore Group and low-cost fitness chain Gym Group.
Friday's economic calendar has UK GDP at 0700 GMT and US retail sales at 1330 GMT followed by US industrial production at 1415 GMT.
The US earnings calendar on Friday has fourth-quarter results from major banks JPMorgan Chase, Citigroup and Wells Fargo.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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