The FTSE 100 is expected to give up half of yesterday’s gains this morning following a sell-off in Asian markets. The UK’s blue chip index is set to open at 5,701, down 13 points (0.25 percent) from Thursday’s close.
Stocks on Wall Street were on the rise after weak US data added to speculation that the Federal Reserve could soon launch a third round of quantitative easing.
The Department of Labor reported that initial claims for unemployment benefits rose 34,000 to 386,000 last week, while the National Association of realtors (NAR) said sales of previously owned homes tumbled 5.4 percent in June.
Additionally, the Conference Board’s leading indicators index dipped 0.3 percent last month following a 0.4 percent increase in May, adding to concerns that the recovery is running out of steam.
The data came only a day after Fed chairman Ben Bernanke said that the recovery had been slower than expected and further stimulus action by the central bank was possible.
“There’s no doubt the market wants more balance sheet expansion from the Fed. If US economic data maintains its current course, particularly the jobs market, it will get it,” said chief market strategist at IG Index Chris Weston.
“The only problem with QE, as many seem to have forgotten, is that it doesn’t create jobs.
“Rather, further QE will give the market a short-term ‘sugar’ high, that will weaken the dollar, boost commodity prices and provide a short-term wave behind equity markets.”
However, Asian stocks fell today after the Chinese government said local authorities shouldn’t relax property price control policies.
Across the Atlantic, the Dow Jones Industrial Average (DJIA) added 34 points (0.25 percent) to end the day at 12,943 and the broader S&P 500 index rose 3.5 points (0.25 percent) to close at 1,376.
In Asia, Japan’s Nikkei 225 index fell 112 points (1.3 percent) to 8,683 by the end of the session and China's Shanghai Composite Index was down 13.5 points (0.6 percent) at 2,171.