(Alliance News) – London’s FTSE 100 posted modest losses around midday on Monday as a sharp drop in oil prices sent energy firms BP and Shell down.
Fresh declines from car finance providers also dented sentiment as investors looked ahead to a crucial week which includes the UK budget, key US data and technology sector earnings.
The FTSE 100 index fell 20.47 points, or 0.3%, to 8,228.18 points. The FTSE 250 fell 42.07 points, or 0.2%, to 20,778.66, and the AIM All-Share lost 3.15 points, or 0.4%, to 719.52.
The Cboe UK 100 fell 0.3% to 823.83, the Cboe UK 250 fell 0.1% to 18,307.30 and the Cboe Small Companies fell 0.5% to 16,827.52.
“The next two weeks look to determine the future direction of risk sentiment and consumer and business confidence for the remainder of 2024 and beyond,” said Kathleen Brooks of XTB Research.
“The risk of events is huge, there is a hotly anticipated UK budget this week, the US is releasing third quarter GDP and next Friday the US October payrolls are due. Next week, Tuesday, the presidential elections in the United States, after which there will be two key meetings of central banks: the Bank of England and the meeting of [Federal Open Market Committee] in the United States; Both central banks are expected to cut rates when they meet next week.”
In London, a sharp drop in oil prices limited progress.
Brent oil was trading at USD71.67 a barrel around lunchtime on Monday, down from USD75.98 at the London close on Friday.
Ipek Ozkardeskaya of Swissquote Bank said a “sigh of relief” had been breathed as Israel’s attack on Iran on Saturday was more “scaled down than expected”, targeting military facilities and not nuclear or nuclear infrastructure. country’s oil industry.
“The icing on the cake is that Iran has not vowed to respond, in a clear sign of de-escalation or at least not re-escalation of tensions in the region. As a result, the geopolitical tensions that kept oil bulls on alert …. they went up in smoke,” he added.
The drop in oil prices weighed on BP, which fell 2.2%, and Shell, which fell 2.3%.
However, hopes of lower fuel costs sent British Airways owner IAG up 1.0% and budget airline easyJet up 2.2%.
The mood elsewhere in Europe was mixed. The CAC 40 in Paris rose 0.1%, while the DAX 40 in Frankfurt fell 0.3%.
Stocks in New York are expected to open higher. The Dow Jones Industrial Average is expected to rise 0.4%, the S&P 500 is seen rising 0.5% and the Nasdaq Composite is seen rising 0.6%.
XTB’s Brooks said this week’s economic data will be “critical” for the FOMC’s next move.
“There are currently 24 basis points of rate cuts priced for next week’s meeting and the market is convinced that the Fed will cut rates soon after the election,” he added.
The pound was trading at USD1.2980 in early afternoon on Monday, up from USD1.2979 on Friday. The euro settled at USD1.0818, up from USD1.0813. Against the yen, the dollar was trading at JPY152.71, up from JPY152.07.
On Wednesday, Chancellor Rachel Reeves will reveal her budget statement, her first since the Labor Party came to power in July.
On Monday, Prime Minister Keir Starmer is expected to promise that the Budget will “ignore the populist chorus of easy answers”, amid a series of planned tax rises, including an increase in employer’s national insurance by at least one percentage point.
Referring to the previous governments of Tony Blair and David Cameron, the prime minister will tell those present during a speech: “We are not in 1997, when the economy was decent but public services were on their knees.
“And this is not 2010, when public services were strong, but public finances were weak. These are unprecedented circumstances.”
Ebury’s Enrique Diaz-Alvarez said the budget was shaping up to be an “unusually large political event risk for the pound”. Widespread tax rises are expected, including capital gains tax, employer NI contributions, inheritance tax and pensions.”
“Chancellor Reeves will also provide details of Labour’s fiscal rule change, which is expected to unlock billions of pounds of extra borrowing. If he can convince investors that Labor has a credible plan to boost growth, without triggering a gilt market, then sterling may emerge unscathed, but that remains a big “if”.
In London, car finance providers remained under pressure after an unfavorable court ruling.
Close Brothers fell a further 11%, Lloyds Banking Group 2.8% and Barclays 2.0%. All three suffered heavy declines on Friday.
Lloyds said it was “assessing the potential impact” of a court ruling last week, which sided with consumers in a dispute over commissions received by companies selling car finance loans.
On Friday, the justices ruled that dealerships must inform customers of any fees received when taking out loans.
The ruling makes it illegal for dealers to obtain a commission from lenders such as Lloyds and other car finance seller Close Brothers “without obtaining the customer’s fully informed consent to payment”.
Lloyds said the ruling “sets a higher bar” for disclosure of such fees than previously thought.
Regulators are looking into whether firms such as Lloyds and Close Brothers mis-sold products to customers, using hidden arrangements of so-called discretionary commissions.
The ruling “changes the law”, analysts at Peel Hunt said, adding that for Close Brothers and the wide range of different outcomes it means the potential financial implications are “unquantifiable” at the moment.
Trainline fared better, with shares rising 8.5% after raising its full-year outlook on rising ticket sales.
The rail ticketing platform now expects annual net ticket sales growth of between 12% and 14%, an increased forecast from the upper range of growth between 8% and 12%. In the 2024 financial year, net ticket sales were £5.30 billion, an increase of 22% compared to the 2023 financial year.
Revenue is now expected to grow between 11% and 13%, a forecast raised from the high end to a range of 7% to 11%.
Gold was trading at USD2,730.98 an ounce as of early afternoon on Monday, up from USD2,729.94 when shares closed in London on Friday.
By Jeremy Cutler, Alliance News reporter
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