Stocks called up as focus turns to inflation

(Alliance News) - Stocks in London are set to open higher on Thursday as market focus turns to inflation in the US and Europe and whether it is cooling enough to justify a pause in September from the respective central banks.

IG says futures indicate the FTSE 100 to open 6.93 points, or 0.1%, higher on Thursday at 7,480.60. The index of London large-caps closed up 8.68 points, or 0.1% at 7,473.67 on Wednesday.

A flash inflation print for the EU at 1000 BST and the US personal consumption expenditures index - one of the US Federal Reserve's preferred inflationary gauges - will be released at 1330 BST.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said a bad surprise on the topside for the US data could "wash out" the past days' optimism regarding the future of the Fed policy.

"So, fingers crossed, we really need the US inflation to fall, and to stay low," she said.

In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average closing up 0.1%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.5%.

Stocks were buoyed as softer economic data in the US painted a picture of a slowing economy, raising the likelihood that US interest rates have peaked.

According to an updated estimate from the US Bureau of Economic Analysis, the US economy grew less than initially expected in the second quarter of 2023. In addition, data from ADP showed that job growth in the US private sector slowed significantly in August.

The dollar staged a small recovery on Thursday morning, after initially slumping in the wake of the weaker-than-expected US data on Wednesday.

Sterling was quoted at USD1.2717 early Thursday, down from USD1.2732 at the London equities close on Wednesday.

The euro traded at USD1.0918, lower than USD1.0931. Against the yen, the dollar was quoted at JPY145.99, higher versus JPY145.75 late Wednesday.

In Tokyo on Thursday, the Nikkei 225 index was up 1.1%. The S&P/ASX 200 in Sydney was marginally higher.

In China, the Shanghai Composite was down 0.6%, while the Hang Seng index in Hong Kong was down 0.4%.

China's biggest developer Country Garden faces a crunch vote on extending debt repayment terms that could determine whether it defaults, plunging the country's property market deeper into turmoil.

The firm has racked up debts of more than USD150 billion and this week reported a record CNY48.9 billion - around USD6.7 billion - loss for the first six months of the year.

Country Garden warned Wednesday that it faced a default if its financial performance "continues to deteriorate", adding it "felt deeply remorseful for the unsatisfactory performance".

Bondholders are due to conclude a crunch vote Thursday on whether to extend repayment on a keynote worth USD535 million.

Creditors have until 2200 CST, or 1500 BST, to decide on a proposal to postpone this payment, according to Bloomberg.

Gold was quoted at USD1,945.01 an ounce early Thursday, virtually unchanged from USD1,945.03 at the London equities close on Wednesday. Brent oil was trading at USD85.22 a barrel, up from USD84.70 late Wednesday.

In Thursday's corporate calendar, there are half-year results from Grafton, Aferian and PPHE Hotel Group, as well as full-year results from Revolution Beauty and Oxford Cannabinoid.

The economic calendar has the US weekly unemployment claims report at 1330 BST.

By Heather Rydings, Alliance News senior economics reporter

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