Stocks to pull back as data in focus

(Alliance News) - Stocks in London are set to open lower on Monday, with the focus to be on economic data to come later in the week.

IG says futures indicate the FTSE 100 to open down 21.3 points, 0.3%, at 7,684.98 on Monday. The index of London large-caps rose 21.79 points, 0.3%, at 7,706.28 on Friday, but closed the week down 0.1%.

With the FTSE 100's lack of tech firms, the index missed out on the AI-fuelled equity rally in other global markets following Nvidia's results.

Investors are now shifting their attention to this week's economic data, which will inform expectations of the timing of potential interest rate cuts. According to CME's FedWatch tool, the market now expects the Federal Reserve to enact its first rate cut in June. At the beginning of the year, the first 25 basis point cut was widely expected in March.

"Markets will be looking at the US [personal consumption expenditures] inflation number on Thursday, along with durable goods orders and new home sales data, for clues as to when the Fed could start cutting rates," commented Andre Cilliers, currency strategist at TreasuryONE.

Sterling was quoted at USD1.2663 early Monday, edging lower than USD1.2667 at the London equities close on Friday. The euro was changing hands at USD1.0823, rising from USD1.0818. Against the yen, the dollar was quoted at JPY150.47, up slightly versus JPY150.44.

In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 marginally higher, and the Nasdaq Composite rose 0.3%.

In Asia on Monday, the Nikkei 225 index in Tokyo closed up 0.4%. In China, the Shanghai Composite was down 1.1%, while the Hang Seng index in Hong Kong was down 0.6%, likely succumbing to profit-taking after a strong run last week. The S&P/ASX 200 in Sydney closed up 0.1%.

Gold was quoted at USD2,032.50 an ounce early Monday, slightly lower than USD2,033.76 on Friday.

Brent oil was trading at USD81.29 a barrel, lower than USD82.16, but remaining supported by the risk outlook in the Middle East.

"At the beginning of the month, oil prices were going up, but now prices have stalled because of different factors affecting the oil market. On the one hand, tensions in the Middle East and less oil being produced by Opec+ countries have caused prices to go up. On the other hand, people in China are buying less oil, which capped the price rise," TreasuryONE's Cilliers noted.

More than half of UK export businesses have been affected by disruption to shipping in critical trade routes along the Red Sea, according to the British Chambers of Commerce. The BCC warned that pressure on businesses will start to build if the problems persist.

Some 53% of manufacturers and business-to-consumer service firms, which includes retailers and wholesalers, said they have been affected by turmoil in the Red Sea. The companies surveyed reported facing increased costs, with some seeing the cost of hiring containers tripling since the disruption. Others mentioned logistical delays adding up to three or four weeks to delivery times.

A quiet economic calendar on Monday has new US home sales and the Dallas Fed manufacturing index at 1500 and 1530 GMT.

In the local corporate calendar, distribution firm Bunzl reports annual results.

By Elizabeth Winter, Alliance News deputy news editor

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