(Alliance News) - Stock prices in London are set to open broadly flat on Friday, as investors await release of the UK GDP data after the European Central Bank on Thursday kept interest rates steady.
IG says futures indicate the FTSE 100 index of large-caps to open just 0.58 points higher at 6,003.90 on Friday. The FTSE 100 index closed down 9.52 points, or 0.2%, at 6,003.32 on Thursday.
"For a nice change of pace, the euro dominated the headlines yesterday. There wasn't a huge amount to report from the European Central Bank update as rates and the stimulus package was kept on hold – in line with forecasts," said CMC Markets UK analyst David Madden.
The ECB maintained its ultra-loose monetary policy amid pressure to deliver another round of stimulus to ward off the economic fallout from the pandemic.
The central bank's 25-member governing council said it was holding its key refinancing rate at zero on an open-ended basis, while maintaining its bond-buying programme at EUR1.35 trillion. The programme is currently due to end in June 2021.
The Frankfurt-based bank also left its deposit rate unchanged at negative 0.5% and the marginal lending rate at plus 0.25%, saying it plans to hold borrowing costs at their present levels on an open-ended basis.
In addition, the ECB said it plans to reactivate a long-term review of its policy instruments, which was put on hold earlier this year due to the onslaught of the coronavirus crisis.
ECB President Christine Lagarde forecast the eurozone's coronavirus downturn would be less severe than feared.
The euro traded at USD1.1839 on Friday, lower on USD1.1880 late Thursday. Against the yen, the dollar was quoted at JPY106.16, soft from JPY106.20.
"Policy makers at the central bank said there was no need to over react to the strength of the single currency. Thanks to the extremely aggressive monetary easing policy from the Fed, and uncertainty in relation to the UK’s future trading relationship with the EU, the euro has been pushed up," added Madden.
Sterling was quoted at USD1.2826 early Friday, lower than USD1.2877 at the London equities close on Thursday.
Talks on a post-Brexit trade deal between the UK and the EU are hanging in the balance after Brussels demanded the UK abandon plans to override key elements of the Withdrawal Agreement.
At a stormy meeting in London on Thursday, the Cabinet Office Minister Michael Gove insisted the government "could not and would not" drop measures in legislation tabled earlier this week.
It prompted European Commission Vice President Maros Sefcovic to accuse the UK of an "extremely serious violation" of international law, putting the ongoing trade talks in jeopardy.
Meanwhile UK Prime Minister Boris Johnson is facing growing unrest among Tory MPs deeply unhappy at the threat to undermine Britain's traditional support for the international rule of law.
The row erupted as the latest round of trade talks – also taking place in London – ended on Thursday with both sides acknowledging that "significant differences" remain.
Johnson has set a deadline of October 15 for an agreement to be reached, otherwise he has said he will simply walk away from the negotiating table.
In the US on Wednesday, Wall Street ended in the red, with the Dow Jones Industrial Average ending down 1.5% and S&P 500 down 1.8%. The tech-heavy Nasdaq Composite closed 2.0% lower.
In Asia on Thursday, the Japanese Nikkei 225 index is up 0.6%. In China, the Shanghai Composite is up 0.4%, while the Hang Seng index in Hong Kong is up 0.7%.
The economic events calendar on Friday has a UK industrial production data, alongside monthly UK GDP reading at 0700 BST. In addition, there are Germany and US inflation figures at 0700 BST and 1330 BST, respectively.
The UK corporate calendar on Friday has annual results from emerging markets-focused money manager Ashmore Group.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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