LONDON MARKET EARLY CALL: FTSE 100 called up; pound down before UK GDP

(Alliance News) - Stocks in London are set to open higher on Thursday, and the FTSE 100 may snap a three-day losing streak, with a UK gross domestic product reading to come.

IG says futures indicate the FTSE 100 to open 27.8 points higher, 0.3%, at 10,860.95 on Thursday. The index of London large-caps closed down 11.04 points, 0.1%, at 10,833.15 on Wednesday.

Sterling fell to USD1.3494 on Thursday morning, from USD1.3507 at the time of the London equities close on Wednesday. Versus the euro, it was steady at EUR1.1704.

Thursday's global economic calendar has UK gross domestic product figures at 0700 BST, before US producer price numbers at 1330.

The UK economy is expected to have grown 0.4% quarter-on-quarter in the three months to June 30, easing from a 0.6% rise in the first quarter, according to consensus cited by FXStreet.

Commerzbank analyst Michael Pfister commented: "Such figures would usually justify the Bank of England raising interest rates, given the ongoing inflationary risks. But there is a problem here: since the start of 2022, UK growth figures have shown an unexpected trend. Growth is strong in the first half of the year, only to slow significantly in the second half. The Bank of England has thus recently indicated that one should not place too much reliance on the figures until the issue of residual seasonality in the data has been resolved.

"Even positive surprises in the growth figures should therefore be treated with caution and not immediately interpreted as signalling interest rate hikes. In recent weeks, however, expectations regarding the BoE have normalised anyway, given the rather dovish comments from officials. While it was anticipated in March that the BoE might implement significant tightening quickly, expectations have shifted towards slower interest rate hikes."

In the US on Wednesday, Wall Street ended mostly lower, with the Dow Jones Industrial Average marginally down, but the S&P 500 up 0.3% and the Nasdaq Composite up 0.5%.

US inflation data for July was in-line with expectations, numbers on Wednesday showed, strengthening the case for a rate hold next month, though numbers for August could swing the pendulum back in favour of a hike.

The Fed's next rate decision is on September 16. According to the CME FedWatch Tool, there is a 60% chance it leaves rates unmoved. Ahead of the decision, there is the August consumer price index reading on September 11, which could move the dial again.

The Bureau of Labor Statistics said US consumer prices rose 3.4% on-year in July, abating from a 3.5% increase in June. The reading was in line with consensus cited by FXStreet.

The euro bought USD1.1525, down from USD1.1539 at the time of the London equities close on Wednesday. Against the yen, the buck rose slightly to JPY159.34 from JPY159.24.

Gold traded at USD4,398.33 an ounce on Thursday morning, down from USD4,422.11 at the time of the closing bell on the London Stock Exchange on Wednesday. A barrel of Brent was fractionally lower at USD88.22 from USD88.88.

President Donald Trump on Wednesday said the US is in control of the strategic Strait of Hormuz and will "keep it."

"The USA. has total control over the Strait of Hormuz. I THINK WE WILL KEEP IT!" Trump wrote on his Truth Social platform. "Our Naval Blockade is being called, by everyone, 'A WALL OF STEEL,' and there is nothing Iran can do about it."

Trump has repeatedly claimed the US controls the strait, which is vital for the flow of energy and other commodity shipping through the Middle East.

However, Iran says it effectively controls much of the waterway and intends to impose a toll system in response to the US war launched by Trump on February 28.

Swissquote analyst Ipek Ozkardeskaya commented: "US and European futures are in the green. Softer Fed expectations, on the other hand, have so far been clouded by rising oil prices and have not translated into a softer US dollar. The EURUSD sees resistance near two-month highs, which also coincide with the top of its year-to-date bearish trend channel, while the USDJPY is testing US and Japanese officials’ nerves a touch below the 160 level."

In Tokyo, the Nikkei 225 surged 1.7%. In China, the Shanghai Composite was up 0.5%, while the Hang Seng Index in Hong Kong was 0.1% higher. Sydney's S&P/ASX 200 was down 0.2%.

Japan's producer prices rose 7.2% year-on-year in July, slowing from an upwardly revised 7.3% increase in the previous month and missing the 7.4% rise consensus forecast.

Thursday's UK corporate calendar has half-year results from miner Antofagasta and bingo operator Rank.

By Eric Cunha, Alliance News news editor

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