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LONDON MARKET EARLY CALL: Stocks to ebb; oil advances, dollar retreats

Mon, 20th Nov 2023 06:56

(Alliance News) - Stocks in London are set to open slightly lower on Monday, with the focus set to be on the latest fiscal measures from the UK government, due to be unveiled on Wednesday's autumn statement.

IG says futures indicate the FTSE 100 to open down 9.8 points, 0.1%, at 7,494.45 on Monday. The index of London large-caps closed up 93.28 points, 1.3%, at 7,504.25 on Friday.

Prime Minister Rishi Sunak is expected to use a speech to paint a more positive picture of the economy ahead of the autumn statement.

Sunak will hail having last week hit his pledge of halving inflation as he gives an update on the state of the nation's finances in London on Monday morning.

Chancellor Jeremy Hunt heightened expectations that businesses could find some relief in his financial statement as he said now is the time to boost growth. But he persistently warned against changes that could fuel inflation, dampening speculation that the pressure of income tax could be eased.

Hunt suggested during a round of interviews on Sunday that the personal tax burden will not come down "overnight" as he seeks to avoid prices spiralling again.

Meanwhile, another key catalyst this week will be the latest minutes from the Federal Open Markets Committee on Tuesday, which will provide insight into the US Federal Reserve's thinking behind its most recent meeting.

Earlier this month, the central bank left the federal funds rate range unmoved at 5.25% to 5.50%, a 22-year-high.

"While one might describe them as stale, [the FOMC minutes'] relevance has only increased in recent weeks. The discussion on financial conditions is particularly pertinent now, given the Federal Reserve's decision to skip the final hike implied by the September dot plot, citing the belief that tighter financial conditions resulting from the Treasury curve's long-end selloff could serve as a substitute for a rate hike," said SPI Asset Management's Stephen Innes.

The dollar was weaker in early exchanges in Europe.

Sterling was quoted at USD1.2479 early Monday, higher than USD1.2421 at the London equities close on Friday. The euro traded at USD1.0920, up from USD1.0881. Against the yen, the dollar was quoted at JPY149.06, down versus JPY149.77.

Oil prices were higher, following reports of longer production cuts. Brent crude fetched USD81.26 a barrel early Monday, up from USD79.74 late Friday.

Saudi Arabia is preparing to prolong oil production cuts into next year as Opec+ weighs further reductions in response to falling prices and rising anger over the Israel-Hamas war, the Financial Times reported on Friday. After prices hit a four-month low of USD77 a barrel last week, four people familiar with the Saudi government's thinking told the FT that Riyadh is highly likely to extend its 1 million barrel-a-day cut at least until the spring.

In Asia on Monday, the Nikkei 225 index in Tokyo closed down 0.6%. In China, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was 1.7%. The S&P/ASX 200 in Sydney closed up 0.1%.

Gold was quoted at USD1,980.49 an ounce early Monday, little changed from USD1,981.88 on Friday.

In the US on Friday, Wall Street ended flat to higher, with the Dow Jones Industrial Average little changed, the S&P 500 up 0.1% and the Nasdaq Composite up 0.1%.

Monday's economic calendar has a German producer price reading at 0700 GMT. The week picks up pace with UK public sector finances data on Tuesday, before the all-important autumn statement from Chancellor Jeremy Hunt on Wednesday.

Monday's local corporate calendar has annual results from contract caterer Compass and technical products and services supplier Diploma.

By Elizabeth Winter, Alliance News deputy news editor

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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