(Alliance News) - Stocks in London are set to open lower on Friday, after hawkish rhetoric from the head of the US Federal Reserve sapped risk appetite across global equity markets.
IG says futures indicate the FTSE 100 to open down 43.6 points, 0.6%, at 7,412.07 on Friday. The index of London large-caps closed up 53.95 points, 0.7%, at 7,455.67 on Thursday.
The Fed is prepared, if needed, to hike interest rates further in order to bring inflation down to its long-term 2% target, Fed Chair Jerome Powell said. "We know that ongoing progress toward our two percent goal is not assured: Inflation has given us a few head fakes," Powell told a conference in Washington.
"If it becomes appropriate to tighten policy further, we will not hesitate to do so," he added, in remarks that were briefly disrupted by climate protesters.
Powell's comments come just over a week after the US central bank voted to hold interest rates steady at a 22-year high for a second consecutive meeting, fueling expectations that it was done with rate hikes.
While the Fed's rate-setting committee is "committed" to achieving a sufficiently tight stance of monetary policy, "we are not confident that we have achieved such a stance," Powell said.
The dollar gained ground following the comments, and equities in the US and Asia retreated.
Sterling was quoted at USD1.2226 early Friday, dropping from USD1.2275 at the London equities close on Thursday. The euro traded at USD1.0669, lower than USD1.0709. Against the yen, the dollar was quoted at JPY151.37, up versus JPY151.00.
In Asia on Friday, the Nikkei 225 index in Tokyo closed down 0.2%. In China, the Shanghai Composite was down 0.4%, while the Hang Seng index in Hong Kong was down 1.4%. The S&P/ASX 200 in Sydney closed down 0.6%.
In the US on Thursday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.8% and the Nasdaq Composite down 0.9%.
Meanwhile, the question of a potential US government shutdown looms once again.
Less than two months since the US federal government narrowly avoided running out of funding, the deeply divided Congress once again faces a tight deadline to approve a new budget – just one week.
Neither the Democratic-controlled Senate or the Republican-led House of Representatives has passed a bill to extend government funding, which expires at midnight next Friday into Saturday.
Without an agreement by November 17, the world's largest economy will instantly begin pumping the brakes: 1.5 million government employees will go without pay, most federal facilities including national parks will be closed, and sectors such as air travel could be forced to slow down.
Gold was quoted at USD1,957.66 an ounce early Friday, lower than USD1,961.11 on Thursday. Brent oil was trading at USD80.33 a barrel, lower than USD80.69.
In Friday's UK corporate calendar, there are third-quarter results from Allianz Technology Trust and Wheaton Precious Metals.
The economic calendar for Friday has UK gross domestic product data at 0700 GMT. There are also UK trade statistics at the same time.
By Elizabeth Winter, Alliance News senior markets reporter
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