(Alliance News) - Stocks in London are set to open higher on Monday, following strong gains from US tech shares on Friday and a solid start to the week for Asian equities.
IG says futures indicate the FTSE 100 to open up 42.9 points, 0.5%, at 8,182.73 on Monday. The index of London large-caps added 60.97 points, 0.8%, at 8,139.83 on Friday. It would mean the FTSE 100 opens at a record level.
In China, the Shanghai Composite was up 0.7%, while the Hang Seng index in Hong Kong traded 1.0% higher. The S&P/ASX 200 in Sydney was up 0.9% in late dealings. Financial markets in Tokyo were closed for the Showa Day public holiday.
In New York on Friday, the Dow Jones Industrial Average closed up 0.4%, the S&P 500 up 1.0% and the Nasdaq Composite jumped 2.0%.
Focus this week turns to Wednesday's US Federal Reserve decision.
"Previously, bullish sentiment was buoyed by the anticipation of multiple rate cuts, seen as a catalyst for sustained market growth. However, the narrative has shifted as market pricing reflects a more restrained approach ahead of the [Federal Open Market Committee] meeting with fewer projected rate reductions than the current dot plot for the year," SPI Asset Management analyst Stephen Innes commented.
"In his final public remarks before the blackout period preceding the April 30-May 1 FOMC meeting, Fed Chair Jay Powell expressed concern about persistent inflation and resilient economic growth. Powell further emphasized that rate cuts would be on hold until the Fed gains greater confidence in inflation moving sustainably toward the 2% target. Hence, the market has virtually priced in a more hawkish Fed scenario; other than removing all cuts from the dot plot, it's unlikely the Fed will hawkishly surprise the market. But in a worst-case scenario where the Fed pushes rate cuts out to 2025, this poses a critical question for equity bulls: Can they maintain confidence in the absence of easing measures this year."
US inflation pressure was hotter than expected last month, according to the Federal Reserve's preferred gauge released Friday.
The Bureau of Economic Analysis said the core personal consumption index gauge grew 2.8% in March, the annual pace of growth unmoved from February. The latest reading topped the FXStreet cited consensus of 2.6%.
The core PCE reading does not include food and energy. The annual headline PCE figure, which does, hotted up to 2.7% in March, from 2.5% in February, and topping the consensus of 2.6%.
The pound was quoted at USD1.2542 early Monday, up markedly from USD1.2453 at the time of the London equities close on Friday. The euro stood at USD1.0727, climbing from USD1.0676. Against the yen, the dollar was trading at JPY156.37, down sharply from JPY157.41 on Friday, but after rising to another multi-decade high of JPY160.14 earlier Monday.
On the wild moves in the yen, Commerzbank analyst Michael Pfister commented: "Today is a holiday in Japan, which means it could simply be thin markets as Japanese traders are absent. It is also unclear whether the Bank of Japan and the Ministry of Finance would intervene in such a move on a holiday. After all, the pressure on them seems to be increasing after the yen's sharp downward move on Friday. We may have to wait until tomorrow, when the Japanese market reopens, to get a more detailed explanation for this morning's move. Until then, it may be difficult to comment on the move."
Brent oil was quoted at USD87.51 a barrel early Monday, down from USD88.26 late Friday. Gold was quoted at USD2,331.24 an ounce, a touch off the USD2,333.37 it bought at the time of the London equities close Friday.
Monday's economic calendar has a German inflation reading at 1300 BST.
The local corporate calendar has a trading statement from insurer Beazley.
By Eric Cunha, Alliance News news editor
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