Key facts
- London stocks were set to open higher on Monday.
- The FTSE 100 was called around 29 points higher at roughly 10,724.
- Brent crude rose more than 1% to around $106 a barrel.
- West Texas Intermediate traded above $93 a barrel.
- US President Donald Trump rejected an Iranian proposal to end the conflict and reopen the Strait of Hormuz.
- Gold prices were sharply lower.
London stocks were poised for a higher open on Monday, with the FTSE 100 index expected to rise approximately 29 points to around 10,724. This anticipated gain follows the index's 0.1% rise to close at 10,695.25 on Friday.
The upward momentum is largely driven by a rebound in oil prices. Brent crude increased by over 1% to approximately $106 a barrel, and West Texas Intermediate traded above $93 a barrel. This recovery occurred after US President Donald Trump rejected an Iranian proposal aimed at ending the conflict and reopening the Strait of Hormuz, though negotiations are expected to continue this week.
The renewed rise in oil prices could benefit energy producers like BP and Shell. However, higher crude prices also heighten inflation concerns, potentially reinforcing the prospect of elevated global interest rates. Precious metals, including gold, remained under pressure, with gold prices sharply lower after closing Friday at $4,282.86. Sterling was relatively stable against the dollar, trading around $1.324.
Asian equities presented a mixed picture, with Chinese shares declining while Hong Kong saw a slight increase, as investors navigated geopolitical uncertainties alongside gains on Wall Street the previous Friday.
In the UK, attention is shifting towards Chancellor John Healey's budget on October 28. Higher government borrowing and rising financing costs are expected to limit the Treasury's fiscal flexibility. Prime Minister Andy Burnham faces his first Labour conference amid this challenging fiscal environment.
US-China relations are also under scrutiny following an agreement between Donald Trump and Xi Jinping to establish a communication channel for artificial intelligence incidents and continue technology dialogues. The market's expected gain on Monday is partly influenced by the FTSE 100's significant exposure to oil producers, rather than a broad reduction in risk aversion. If crude oil prices remain above $100 and bond yields stay elevated, energy shares may outperform, while rate-sensitive sectors like consumer and property could face constraints ahead of a week with significant US data releases.