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FTSE set to start well on Thursday

UK stocks are expected to start as brightly, following markets in New York and Asia.

It is not the first or last time that stocks move on the sentiments of the US Federal Reserve, which yesterday was revealed to still be in supportive mood.

Minutes from the Fed’s most recent policy meeting, in September, confirmed that the US central bank does not intend to raise interest rates until the American economy is able to support them.

“After a long period of underperformance as markets priced in a greater possibility of a rate hike, the FOMC minutes seem to have ‘temporarily’ poured cold water on this notion and given some relief to struggling equities,” said Stan Shamu, analyst at IG Markets.

“The main points from the minutes were that the Fed downgraded its growth outlook slightly in the short and medium term due to a stronger projected USD and a slower rate of home price appreciation. 

“Additionally risks to global growth will be a factor and inflation forecasts were revised down a touch.

“Essentially the Fed sees greater downside than upside risk to growth outlook.”

On Wall Street the Dow Jones tacked on the best part of 300 points – rising 274 or 1.64% to 16,994 – whilst the S&P 500 and NASDAQ advanced 1.75% and 1.9% respectively.

Australian stocks were also on the front foot, with the S&P ASX 200 gaining over 1%, meanwhile India’s Sensex and Hong Kong’s Hang Seng were both 1% higher as well.

Japan’s Nikkei and the Shanghai Composite however saw red, falling 0.4% and 0.12% respectively.

Blue-chip stocks in London are set to add some 55 points in Thursday’s early deals with IG Markets calling the FTSE 100 open at 6,551 to 6,556.

After the Federal Reserve taking centre stage yesterday, Mark Carney’s Bank of England will be in focus today as its policy-making committee will make its decision on interest rates.

In corporate news, meanwhile, Oilfield services group Wood Group (John) is set to release an interim management statement a couple of days after Liberum Capital turned bearish on the sector.

“Oil companies are focused on costs at a time when oil prices are weakening. We fear the slowdown in demand for Oil Services may be prolonged and have cut our TPs [target prices] to reflect bottom-of-cycle multiples,” the broker said.

Its target price for Wood was reduced to 610p, prompting a ‘sell’ recommendation.

“Relatively high exposure to Upstream O&G, non-NOC [national oil corporation] clients and weak Turbine Activities point to challenges,” the broker said.

Significant announcements expected

Companies: Interims: Brown (N) Group (LON:BWNG). Trading statement: John Wood Group (LON:WG.), Victrex (LON:WG.), Hays (LON:HAS)

Economic: UK: RICS housing survey, MPC announcement. EU: ECB monthly bulletin. US: Weekly jobless claims. Wholesale inventories


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