(Alliance News) - Stocks in London are set to open higher on Monday as markets adjusted to higher-for-longer interest rates expectations.
IG says futures indicate the FTSE 100 to open 7.02 points higher, or 0.1%, at 7,501.60 on Monday. The index of London large-caps closed up 43.04 points, 0.6%, at 7,494.58 on Friday.
"Having spent most of the last few weeks fretting about the prospect of another rate hike and higher rates for longer the thinking now appears to be that a resilient economy and jobs market could mean that companies will be able to deliver better revenues and earnings growth," said Michael Hewson, chief market analyst at CMC Markets.
On Friday, the US Bureau of Labor Statistics said US nonfarm payrolls rose by 336,000 in September, significantly above FXStreet-cited consensus of 170,000. The September read was also above the 227,000 jobs added in August.
Growth in pay slowed, however. Average hourly earnings rose 4.2% in September on-year, missing consensus of a 4.3% rise and down from a 4.3% rise in August. Earnings rose 0.2% in September from August. They had also risen 0.2% in August from July.
"US payrolls surged in September, with upward revisions underscoring the strength seen in economic activity over the summer. While we doubt this can last, [Friday]'s number keeps alive the prospect of another rate hike and certainly backs the Federal Reserve's argument on the need for interest rates to stay higher for longer," ING's James Knightley commented.
In the US on Friday, Wall Street ended higher with the Dow Jones Industrial Average up 0.9%, the S&P 500 up 1.2% and the Nasdaq Composite up 1.6%.
The dollar strengthened on Monday morning as flaring tensions in the Middle East prompted a move to the safe-haven currency.
Sterling was quoted at USD1.2198 early Monday, down from USD1.2226 at the London equities close on Friday. The euro traded at USD1.0553, lower than USD1.0576. Against the yen, the dollar was quoted at JPY149.20, virtually unchanged from JPY149.18 on Friday.
Prime Minister Benjamin Netanyahu warned Israel on Sunday to prepare for a "long and difficult" conflict a day after Palestinian militant group Hamas launched a surprise assault from Gaza, firing a barrage of rockets and sending a wave of fighters who gunned down civilians and took at least 100 hostages.
More than 700 Israelis have been killed since Hamas launched its large-scale attack, according to the Israel Defense Forces on Monday – the country's worst losses since the 1973 Arab-Israeli war.
Gaza officials reported at least 413 deaths in the impoverished and blockaded enclave of 2.3 million people, which was hammered by Israeli air strikes on 800 targets ahead of what many feared may be a looming ground invasion.
The S&P/ASX 200 in Sydney was up 0.2% on Monday, while the Shanghai Composite was down 0.6%. Hong Kong halted trading at its stock exchange on Monday after Typhoon Koinu generated torrential rainfall overnight.
Financial markets in Tokyo were closed for Health and Sports Day in Japan.
Gold was quoted at USD1,848.74 an ounce early Monday, higher than USD1,831.35 at the London equities close on Friday. Brent oil was trading at USD87.34 a barrel, up from USD84.22 late Friday.
In Monday's corporate calendar, there are full-year results from Sareum Holdings.
The economic calendar has Irish industrial production and turnover at 1100 BST.
By Heather Rydings, Alliance News senior economics reporter
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