The FTSE 100 index looks set to start fairly flat on Thursday, licking its wounds after big falls in the previous session as the decline in Asian markets slowed and US stock futures rallied after Wall Street plunged overnight amid worries over coronavirus (COVID-19) infections and the outcome of next week’s US elections.
Investors in London also have a flood or corporate news to ingest on Thursday, including numbers from two banks, an oil major, the UK’s dominant telecoms player, and a global advertising giant.
Spread betting firm CMC Markets expects the blue-chip index to open around 5 points higher at 5,587, having dropped 146.19 points, or 2.4% on Wednesday to close at 5,582.82.
Overnight in New York, the Dow Jones Industrials Average plunged 943 points, or 3.4% – its biggest fall since June – to end at 26,519, while the broader S&P 500 index shed 3.5%, and the tech-laden Nasdaq Composite dropped 3.7% with a shedload of key US tech results due after-hours on Thursday.
The falls by Asian markets were less pronounced on Thursday, however, as the COVID-19 pandemic there is seen more under control, with Hong Kong’s Hang Seng index down 0.6%, and Japan’s Nikkei 225 index off 0.4%.
Jeffrey Halley, senior market analyst, Asia Pacific at OANDA said: “The blue wave trade became Moody Blue overnight, as buy everything turned into sell everything.
“The belated realisation that the US Senate race is the real election race next week is likely to dampen any comeback enthusiasm, with nine states too close to call and the Supreme Court waiting to adjudicate results.”
On the macro front, after both France and Germany yesterday introduced second national lockdowns, the latest European Central Bank meeting will be the main focus.
The Bank of Japan today made no changes to its monetary policy settings, as expected, though it trimmed its growth forecasts to reflect sluggish service spending during summer.
Investors expect the European Central Bank to similarly hold off on new measures, but to instead hint at action in December.
Among the data due Thursday, German unemployment and inflation data, European confidence surveys, advance US GDP figures and the latest weekly US jobless claims will also all be closely watched.
Lloyds main corporate interest
Probably the most focus on the UK corporate front Thursday will be on high street lender Lloyds Banking Group PLC (LON:LLOY) after it posted bad debt provisions of £2.4bn in the second quarter and £1.4bn in the first.
In the second quarter, the massive provision and a lower net interest margin led Lloyds to reports a statutory loss before tax of £602mln, though the UK’s number-one lender pointed to “early signs of recovery” in core markets, such as consumer spending and the housing market.
Meanwhile, after BP PLC (LON:BP) posted slightly better than expected Q3 results on Tuesday, it will be Royal Dutch Shell PLC’s (LON:RDSB) turn on Thursday, with the oil major having seen its shares lag its London-listed rival’s this year.
Although it won’t be a stellar third-quarter report, UBS analysts still anticipate a ‘competitive’ financial performance.
“Shell’s underperformance in the year to date owes much less to financial performance and more to the dividend cut at 1Q and the absence of any context or visibility on outlook for the business at either 1Q or 2Q,” the analysts said.
And BT Group PLC (LON:BT.A) reports fiscal half-year numbers on Thursday with its shares having bumped along at around an 11-year low since early summer, not even reports of possible private equity interest having made much of an impact.
COVID-19 has hurt BT in several ways, first-quarter results showed in July, as its business and residential customers were both affected and many have been offered bill credits, its Openreach arm stopping in-home engineering work from March to May, overseas roaming was reduced by travel restrictions, and the BT Sport business suffered from live sporting postponements.
For the second quarter, analysts are forecasting underlying earnings (EBITDA) of £1.8mln, similar to the first.
Investors will also be looking for progress on wholesale deals for Openreach as well as news on the pension deficit.
Around the Markets:
- Sterling: US$1.3021, up 0.1%
- Gold: US$1,879.80 an ounce, up 0.2%
- Brent crude: US$39.20 a barrel, up 0.1%