London’s FTSE 100 is expected to open broadly flat on Thursday as investors await the European Central Bank’s latest interest-rate decision, while elevated oil prices and rising global bond yields continue to weigh on sentiment.
Futures indicate the FTSE 100 will open just 4 points higher at around 10,671.98, following Wednesday’s sharp 141.6-point, or 1.3%, decline to 10,670.06.
Wall Street fell for a third straight session on Wednesday, with the Dow Jones Industrial Average down 405 points, or 0.8%, while the S&P 500 fell 0.5% and the Nasdaq Composite declined 0.6%.
Markets remain under pressure from a combination of oil above $100 a barrel, rising inflation expectations and climbing government bond yields, increasing concerns that central banks could be forced to maintain tighter monetary policy.
US Treasury yields continued to rise despite the Treasury Department announcing plans to triple long-term bond buybacks to as much as $6 billion.
The yield on the benchmark 10-year US Treasury climbed to 4.84% on Thursday morning from 4.81% on Wednesday, while the 30-year yield increased to 5.29% from 5.26%.
The previous session saw the 10-year yield approach 4.86%, while the 30-year briefly moved above 5.31%.
The Treasury’s expanded buyback programme had been intended to help calm conditions in the bond market, but investors had reportedly been anticipating purchases of as much as $8 billion to $10 billion.
Quintex Intel analyst Stephen Innes said the announcement consequently fell short of market expectations, triggering another move higher in yields. A strong 10-year Treasury auction later in the session provided some relief but failed to reverse the broader pressure.
Oil remains another major concern for investors after Brent crude broke through $100 a barrel for the first time since July amid escalating conflict between the US and Iran.
Brent eased slightly to $100.62 a barrel on Thursday morning, compared with $101.07 at Wednesday’s London close, but remains at levels likely to increase concerns over energy-driven inflation.
Asian markets followed Wall Street lower overnight. Japan’s Nikkei 225 fell 0.4%, China’s Shanghai Composite declined 0.5%, Hong Kong’s Hang Seng dropped 1.3%, and Australia’s S&P/ASX 200 lost 1.2%.
Commodity markets remained elevated, with gold trading around $4,428 an ounce, while copper stayed close to record territory after three-month prices reached $14,728 a tonne this week.
Copper has been supported by tight supplies alongside growing demand from electricity grids and artificial-intelligence infrastructure, as well as uncertainty surrounding tariffs.
Bitcoin was trading near $78,500, having slipped around 0.5%.
Attention now turns to the European Central Bank’s rate decision, alongside another important batch of inflation data.
US producer prices and weekly jobless claims are due at 1330 BST on Thursday, ahead of the more closely watched US consumer inflation figures on Friday. German inflation data is also due earlier in the session.
On the UK corporate calendar, Primark owner Associated British Foods and electrical retailer Currys are scheduled to issue trading updates.
With Brent remaining above $100 and government borrowing costs continuing to climb, the ECB decision and upcoming US inflation figures are likely to be key drivers for markets as investors reassess the outlook for global interest rates.
