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London open: Stocks open higher on expectations of loose policy by central banks
The FTSE opened on the front foot on Friday after gains in the US as sluggish economic data reduced the chances of an interest rate hike by the Federal Reserve this year.
Stocks closed higher in the US as data showed consumer prices fell a seasonally adjusted 0.2% in September, which was in line with expectations but worse than the previous month’s 0.1% dip and well below the Fed’s 2% target. It follows weak reports including US retail sales and non-farm payrolls, prompting analysts to push back forecasts for a rate increase.
A slate of recent lacklustre data from China has also added to hopes of further stimulus measures from the central bank.
In another lift to markets, remarks from European Central Bank policymaker Ewald Nowotny raised the prospect of additional policy loosening. Nowotny on Thursday said fresh measures were needed to lift inflation towards the monetary authority’s target of just below 2%.
“We also have to remember that the ECB only embarked on its €60bn a month QE program in March this year, and it is still due to run until September next year, the stubbornly low levels of inflation throughout Europe has prompted speculation that we may see an announcement that could extend the program into 2017, though even that options is likely to present problems in terms of the amount of assets available,” said Michael Hewson, chief market analyst at CMC Markets.
The ECB will be closely monitoring the final estimate on September Eurozone inflation due at 1000 BST. Eurostat is expected to confirm the consumer price index fell 0.1% year-on-year in September, down from August’s 0.1% rise, as energy prices continued to drag.
Stateside, the University of Michigan’s consumer confidence report will be released at 1500 BST. Industrial and manufacturing production figures will be published at 1415 BST.
On the company front, Astrazeneca plunged as US health regulators declined to approve its fixed-dose diabetes drug combination.
Oil stocks were higher including BP and Royal Dutch Shell as Brent crude and West Texas Intermediate crude futures recovered.
Vodafone climbed after striking a deal to extend its strategic partnership with Russian mobile group MTS and expand its scope in Ukraine.
Rio Tinto rose as it reported increased production in the third quarter.
British American Tobacco edged up as it purchased the final necessary number of shares in Brazilian subsidiary Souza Cruz, the country’s largest cigarette maker, to enable it to take the company private in coming months.
