(Alliance News) - Stocks in London are set to open lower on Monday, retreating slightly ahead of Wednesday's US inflation data, after a strong run last week.

IG says futures indicate the FTSE 100 to open down 13.0 points, 0.2%, at 8,420.76 on Monday. The index of London large-caps closed up 52.41 points, 0.6%, at 8,433.76 on Friday, having hit a record high of 8,455.77 during the day.

The focus for this week will be on US consumer price inflation data on Wednesday, which will likely influence market expectations for future interest rate moves from the US Federal Reserve.

According to FXStreet-cited consensus, consumer prices are expected to have risen 3.4% annually in April, cooling slightly from 3.5% in March.

"A cooler or even consensus reading on core CPI would further reinforce the recent shift in the tone of the US macro narrative where several factors still echo in the backdrop ahead of this week's inflation update. These include the April non-farm payrolls undershoot, subdued average hourly earnings, contractionary ISM readings, a slight uptick in initial jobless claims (possibly distorted by seasonal factors in New York), and weakening consumer sentiment," noted Stephen Innes, managing partner at SPI Asset Management.

Sterling was quoted at USD1.2526 early Monday, higher than USD1.2513 at the London equities close on Friday.

The euro traded at USD1.0771, edging up from USD1.0769. Against the yen, the dollar was quoted at JPY155.80, little changed versus JPY155.87.

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

In Asia on Monday, the Nikkei 225 index in Tokyo was down 0.3%. In China, the Shanghai Composite was marginally lower, while the Hang Seng index in Hong Kong was up 0.7%.

Data over the weekend showed consumer price inflation sped up slightly in China.

According to the statistics office in Beijing on Saturday, the index was 0.3% higher than in April 2023, continuing the inflation trend in the world's second-largest economy. Prices rose 0.1% on-year in March.

However, the prospect of a new wave of US tariffs on Chinese goods could hit sentiment in global markets this week.

According to the Wall Street Journal on Friday, the US is planning to increase tariffs on Chinese clean energy goods, with levies on electric vehicles expected to roughly quadruple. A decision is expected to be announced on Tuesday.

"This announcement is anticipated to roil the bond markets and dampen sentiment across various sectors, triggering widespread but hopefully short-term turbulence in financial markets. That said as history suggests when it comes to the trade war escalation, some form of tit-for-tat response is usually the norm," SPI's Innes commented.

The S&P/ASX 200 in Sydney was down 0.2%.

Gold was quoted at USD2,353.25 an ounce early Monday, lower than USD2,362.94 on Friday. Brent oil was trading at USD82.54 a barrel, falling from USD83.66.

In Monday's corporate calendar, there are earnings from large-cap specialised technical products and services provider Diploma. It's a quieter day on the economic calendar, with no major events scheduled.

By Elizabeth Winter, Alliance News senior correspondent

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