(Alliance News) - Stock prices in London are seen opening lower on Monday amid growing concerns about a fresh spike of Covid-19 cases in China.
IG futures indicate the FTSE 100 index is to open 60.04 points lower at 7,136.20. The index closed up 7.16 points, or 0.1%, at 7,196.24 Friday.
In the US on Friday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.2% and S&P 500 down 0.1% but the Nasdaq Composite up 0.1%.
On Monday, the Japanese Nikkei 225 index was up 1.2%. In China, the Shanghai Composite was down 1.8%, while the Hang Seng index in Hong Kong was down 3.1%. The S&P/ASX 200 in Sydney was down 1.1%.
Shanghai recorded more than 120 Covid cases over the weekend, having seen its first case of the highly contagious BA.5 Omicron strain, forcing officials to launch another mass testing drive.
With China fixated on its zero-Covid strategy of wiping out the disease, there is increasing concern that authorities will revert to another lockdown, with Shanghai residents having only emerged from a two-month confinement in June.
There have also been new infections uncovered in other parts of the country, including Beijing.
The news came after a forecast-busting US jobs report last week indicated the world's top economy was coping so far with the Federal Reserve interest rate hikes, giving it room for more as it battles soaring inflation.
"Equity markets were caught between two competing narratives last week, and could well face similar cross currents this week, as we look to a weaker open on the back of Friday's modest gains, as further US dollar gains, and uncertainty about the economy in China as worries about renewed Covid lockdowns weighed on sentiment," said CMC Markets analyst Michael Hewson.
"On the one hand we saw energy and metals prices slide back sharply on rising concerns over recession risk and demand destruction," added Hewson. "On the other hand, these concerns were offset by a decent US payrolls report which saw the US economy add 372k jobs in June."
China's consumer inflation climbed up in June to the highest point in two years, official data showed Saturday, following rising food prices as pork costs spiked due to tighter supplies.
The world's second-largest economy has largely been spared the impact of a global surge in food prices caused by Russia's war in Ukraine, but the relative stability could be upended by the rising cost of pork - a staple meat in the country.
In June, the consumer price index, a key gauge of retail inflation, rose 2.5% on-year in line with analyst expectations but stayed flat from May due to a price drop in most foods except pork.
The pound was quoted at USD1.1985 early Monday, down from USD1.2040 at the London equities close Friday.
The euro was priced at USD1.0145, down from USD1.0185. Against the yen, the dollar was quoted at JPY137.02, higher against JPY135.88.
Brent oil was trading at USD106.35 a barrel on Monday morning, firm from USD106.00 late Friday. Gold stood at USD1,740.91 an ounce, lower against USD1,744.88.
The UK corporate calendar on Monday has a trading statement from housebuilder MJ Gleeson.
In the economic calendar this week, a US inflation report and Bank of Canada interest rate decision are due on Wednesday.
Ahead this week, US bank earnings season gets underway as JPMorgan Chase and Morgan Stanley report on Thursday and Wells Fargo and Citigroup follow the day after.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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