LONDON MARKET EARLY CALL: FTSE 100 to tread water; oil climbs

(Alliance News) - Stocks in London are set to open flat on Monday in the aftermath of Friday's nonfarm payrolls, barely budging as the Middle East conflict keeps a lid on enthusiasm, though over in Tokyo, AI enthusiasm supported shares.

Trade in equity markets is expected to lack a spark on Monday, amid a US public holiday.

IG says futures indicate the FTSE 100 to open up just 0.2 of a point at 10,831.29 on Monday. The index of London large-caps closed down 0.43 of a point at 10,831.09 on Friday. For the week, the FTSE 100 rose 0.4%.

The pound fell to USD1.3514 early Monday, from USD1.3522 at the time of the London equities close on Friday. Against the euro, sterling was largely unchanged at EUR1.1634 against EUR1.1636.

Versus the dollar, the euro edged fractionally lower to USD1.1611 from USD1.1614. Against the yen, the dollar faded to JPY155.99 from JPY156.03.

Focus this week will be on a European Central Bank decision on Thursday, before US inflation data on Friday.

Last week Friday, numbers showed US nonfarm payroll employment increased by 162,000 in August, beating the FXStreet-cited consensus, which predicted a 56,000 rise.

Commerzbank analyst Thu Lan Nguyen commented: "Ultimately, there is only one important conclusion to draw from Friday's US labour market report, which delivered a surprisingly strong increase in employment: it does not stand in the way of a Fed rate hike this month, but neither does it make such a move significantly more likely. As we argued last week already, this week's US inflation data for August are likely to be the key determinant of the Fed's upcoming policy decision. Unsurprisingly, the dollar's post-payrolls rally proved short-lived."

In New York on Friday, the Dow Jones Industrial Average closed down 0.5%, the S&P lost 0.4% and the Nasdaq Composite declined 0.3%.

Financial markets in New York are closed for Labor Day on Monday.

In Tokyo, the Nikkei 225 surged 2.0%, supported by a 9.9% rise for SoftBank Group.

Swissquote analyst Ipek Ozkardeskaya noted that while the stronger-than-expected jobs report kept a lid on equities, tech largely came through it unscathed, "helped by a rally in chipmakers and renewed AI enthusiasm after OpenAI unveiled GPT-6 Astra".

"Unsurprisingly, Asian tech-heavy indices are following US tech stocks higher this Monday morning, with Japan's SoftBank — one of OpenAI's biggest backers — up around 10% following a nearly 12% jump on Friday. MediaTek — a Taiwanese chip designer that is pushing increasingly into AI — is up 8.50%, while Korea's Kospi index jumps nearly 4%, boosted by a rally in Samsung and SK Hynix," the analyst commented.

In China, the Shanghai Composite was up 0.1%. The Hang Seng Index in Hong Kong was down 0.9%. Sydney's S&P/ASX 200 was up 0.1%.

A barrel of Brent climbed to USD96.28 early Monday from USD95.18 at the time of the London equities close on Friday. Gold traded at USD4,404.61 an ounce, down from USD4,439.40.

Iran's top negotiator on Sunday threatened a more forceful response to any further US attacks after Tehran targeted American warships in their latest round of clashes.

Iranian parliament speaker Mohammad Bagher Ghalibaf, who has acted as chief negotiator in talks to end the war, said Sunday that "the era of proportionate responses has come to an end".

"Any aggression against Iran's interests and security will receive a faster, more intense and more painful response," he added, in a speech carried by state media.

Tehran's top security chief, meanwhile, said Iran would establish a "prohibited zone" near the Strait of Hormuz in coming days.

Monday's global economic calendar includes UK house price data from Lloyds to be out shortly, eurozone economic growth figures and German industrial production data.

Monday's UK corporate calendar includes half-year results from retirement savings provider Standard Life, and full-year results from emerging-markets-focused investment manager Ashmore.

By Eric Cunha, Alliance News news editor

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