Flat start as central bankers point to hikes

(Alliance News) - Stocks in London are set to open flat on Friday, with investor sentiment subdued amid increasing bets that global interest rates will remain higher for longer.

IG says futures indicate the FTSE 100 to open just 0.29 of a point higher at 7,902.90 on Friday. The index of large-caps closed 3.84 points higher at 7,902.61 on Thursday.

A top Federal Reserve official on Thursday said US interest rates are likely to rise further and will need to remain high to effectively tackle inflation.

"Some additional tightening may be needed to ensure policy is restrictive enough" to support the Fed's dual mandate of keeping both unemployment and inflation low, Philadelphia Fed President Patrick Harker said in a speech in Pennsylvania, according to prepared remarks.

"Once we reach that point, which should happen this year, I expect that we will hold rates in place and let monetary policy do its work," he said.

Harker's call to continue tightening monetary policy echoed similar comments made in recent weeks by other FOMC members, including New York Fed President John Williams, and Fed Governor Christopher Waller.

The dollar was mostly higher amid the hawkish Fed rhetoric, though the rally remained limited as the European Central Bank expressed its own hawkishness.

On Wednesday, ECB Chief Economist Philip Lane said that "it will be appropriate to raise rates further" if the "baseline scenario" underlying the ECB's most recent forecasts in March holds.

Minutes from the ECB's most recent meeting, released on Thursday, also signalled there is still more monetary policy tightening on the way.

Sterling was quoted at USD1.2427 early Friday, lower than USD1.2449 at the London equities close on Thursday.The euro traded at USD1.0957, lower than USD1.0971.

Against the yen, however, the dollar was quoted at JPY133.85, lower versus JPY134.04.

Wall Street ended lower on Thursday, with the Dow Jones Industrial Average down 0.3%, the S&P 500 down 0.6%, and the Nasdaq Composite down 0.8%.

US stocks slipped as concerns over the health of the US economy and disappointing earnings weighed on equities.

Initial claims for unemployment support rose in the US last week, figures showed, in another sign that the once red-hot jobs market may be coming off the boil.

Initial jobless claims rose to 245,000 in the week to April 15, this past Saturday, rising from an upwardly revised 240,000 seven days earlier. The previous week's figure was nudged up from 239,000.

The latest figure topped FXStreet-cited market consensus of 240,000 new claims.

Tesla shares dropped 10% after price cuts to its electric vehicles caused its gross profit margin to slip to its lowest level in 13 quarters.

AT&T also lost 10% after it reported its first quarter profit fell, despite rising revenue, as a result of an absence of actuarial remeasurement gain in pensions benefits compared to the year before.

In Tokyo on Friday, the Nikkei 225 index was down 0.3%.

Japan's consumer prices rose 3.1% in March on a year before, matching February's figure and roughly in line with expectations, as inflation slows from four-decade highs, government data showed.

The figure, which excludes volatile fresh food prices, was marginally higher than market expectations of a 3.0% rise and even with February numbers.

Friday's figure comes a week before the Bank of Japan's first policy decision under its new governor, Kazuo Ueda, who has said the central bank's longstanding loose monetary policy is "appropriate".

The 3.1% figure is above the two-percent target, which has been surpassed every month since April last year.

In China, the Shanghai Composite was down 1.4%, while the Hang Seng index in Hong Kong was down 1.2%. The S&P/ASX 200 in Sydney closed down 0.4%.

Brent oil was trading at USD80.88 a barrel early Friday, lower than USD81.29 late Thursday. Gold was quoted at USD1,995.61 an ounce, lower than USD2,002.90 on Thursday.

In Friday's corporate calendar, there are full-year results from medical diagnostics company Angle and car dealership Lookers.

The economic calendar has a slew of flash purchasing managers' index readings, including the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.

By Heather Rydings, Alliance News senior economics reporter

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