FTSE 100 live: London treads water as investors pause for breath

The latest updates on the FTSE 100 and London’s financial markets from City A.M.’s newsroom in the heart of the City of London.

Asian markets begin trading on a downtrend due to subdued demand in China. Monday saw South Korean stocks edge up by 0.3 per cent on the Kospi index, while the country’s currency, the won, weakened by 0.2 per cent against the dollar, settling at Won 1,372.97.  

In Japan, the Topix index declined by 0.2 per cent, with the yen slipping 0.1 per cent against the dollar to ¥155.89. Similarly, Australia’s S&P/ASX 200 index dropped by 0.2 per cent. 

In China, the CSI 300 stock index dropped by 0.6 per cent, while the CSI 2000 index, which monitors small-cap stocks, fell even further, plummeting by 1.3 per cent. Hong Kong’s Hang Seng index also declined by 0.6 per cent, with the Hang Seng Mainland Properties index down by 1.3 per cent. 

S&P 500 and Nasdaq futures remained stable on Monday following a strong performance last week driven by robust company earnings. The dollar held steady at 155.92 yen. 

Gold stood at $2,362 per ounce, up 2.5 per cent last week due to demand from momentum funds and consistent buying from China.  

Oil prices declined at week’s end due to rising US gasoline and distillate inventories before the summer driving season. Brent crude settled at $82.46 per barrel, while US crude dropped to $77.99 per barrel. 

China’s consumer prices continued to rise for the third month in April, signalling increased domestic demand amidst economic stabilization efforts. Year-on-year, consumer prices increased by 0.3 per cent, surpassing expectations.  

China’s core inflation also rose slightly. Overall, the consumer price index (CPI) increased by 0.1 per cent from the previous month, reversing the decline seen in March. But the producer price index (PPI) dropped 2.5 per cent year-on-year in April, extending a 1.5-year decline. 

On the flip side, Chinese authorities have initiated plans to sell 1 trillion yuan worth of long-term bonds as part of efforts to boost economic activity. 

President Biden plans to announce new tariffs on China, possibly on Tuesday, focusing on strategic sectors like electric vehicles, sources told Reuters. 

The Bank of Japan hinted at a more hawkish stance by reducing its planned purchase of Japanese government bonds. Specifically, it lowered the offer amount for bonds maturing in 5-10 years from 475 billion yen to 425 billion yen, still staying within the previously announced range of 400-550 billion yen. 

A recent Chartered Institute of Personnel and Development (CIPD) survey showed British employers expecting a four per cent wage increase over the next year, matching previous findings. This reflects caution amid steady private sector median pay settlements at 4 per cent and public sector projections at 3 per cent.  

This caution aligns with British consumer price inflation easing to 3.2 per cent in March, with a further decrease expected to around 2 per cent in April, primarily due to lower energy prices. 

This week brings key events that could shape trading. Wednesday’s US April inflation data release is pivotal, alongside China’s policy rate decision and the Eurozone’s inflation and growth updates.  

Federal Reserve officials, including Jerome Powell, will also speak, adding to market focus.  

On the economic front, Australia awaits job data and government spending plans, while UK unemployment figures, German inflation data, and Japan’s Q1 GDP estimate are key. Expect speeches from central bankers to influence sentiment.  

Corporate earnings reports, especially from Walmart, Alibaba, BT, Vodafone, Greggs, Tencent, JD.com, and Bayer, will be closely monitored. Notably, UK pub group Marston’s is expected to announce increased half-year profits due to strong festive trading.