LONDON MARKET EARLY CALL: London stocks to brush off Wall Street slide

(Alliance News) - London's key stock index is set to push further higher on Thursday despite ...

Alliance News 20 January, 2022 | 6:55AM
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(Alliance News) - London's key stock index is set to push further higher on Thursday despite another weak finish in the US overnight.

IG says futures indicate the FTSE 100 index of large-caps to open up 34.44 points, or 0.5%, at 7,624.10 on Thursday. The FTSE 100 closed up 26.11 points, or 0.4%, at 7,589.66 on Wednesday.

Stocks in London are seen shaking off another Wall Street tumble to build on recent gains.

In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average ending down 1.0%, the S&P 500 down 1.0%, and the Nasdaq Composite down 1.2%.

A sharp rise in bond yields sparked the sell-off in stocks on Tuesday, which continued into Wednesday. The US 10-year Treasury yield touched 1.9% earlier on Wednesday, its widest since December 2019. The yield has narrowed a little to 1.85% early Thursday in London.

Naeem Aslam, chief market analyst at AvaTrade, said stock index futures were higher on Thursday as shares are "sending an oversold signal which has brought some bargain hunters into the market".

"Although many traders are still not convinced that markets are cheap, they are waiting for the stock indices to fall another 5% or so, which can happen if the current earnings season continues to disappoint," said Aslam.

In Asia on Thursday, the Japanese Nikkei 225 index ended up 1.1%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong soared 2.9%. The S&P/ASX 200 in Sydney rose 0.1%.

China further reduced bank lending costs Thursday in the latest move to boost its stuttering economy, providing some much-needed support to the country's beleaguered developers.

The People's Bank of China said it had lowered the one-year loan prime rate to 3.7%, from 3.8% in December.

It had reduced the LPR – which guides how much interest commercial banks charge to corporate borrowers – in December, for the first time in 20 months, as the economy was threatened by the real estate crisis and coronavirus flare-ups.

Property firm shares and bonds surged on the fresh rate cut.

"The rate cut together with the global easing in yields and stories that Chinese regulators are considering measures to support struggling developers have supported Asian equity sentiment this morning," said Danske Bank.

Sterling was quoted at USD1.3628 early Thursday, flat on USD1.3630 at the London equities close on Wednesday.

The euro traded at USD1.1350 early Thursday, firming on USD1.1345 late Wednesday. Against the yen, the dollar rose to JPY114.46 versus JPY114.25.

Gold was quoted at USD1,840.09 an ounce early Thursday, flat versus USD1,840.20 on Wednesday. Brent oil was trading at USD88.43 a barrel, easing from USD88.68 late Wednesday.

The economic events calendar on Thursday has German producer prices at 0700 GMT, eurozone inflation readings at 1000 GMT and the latest US jobless claims numbers at 1330 GMT.

The UK corporate calendar on Thursday has trading statements from Primark owner Associated British Foods, gambling firm Entain and stockbroker AJ Bell.

By Lucy Heming; lucyheming@alliancenews.com

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