The FTSE 100 made steady progress on Monday as investors positioned for a US interest rate cut that looks almost certain after a poor Non-Farm Payrolls report on Friday.
London’s flagship index was 0.1% at the time of writing, as retailers, banks and housebuilders led the index marginally higher.
“The FTSE 100 ticked higher on Monday as investors shrugged off the weak US jobs numbers which affected sentiment at the end of last week,” says AJ Bell investment director Russ Mould.
“Investors were hoping for a Goldilocks number – which was not hot enough to prevent the Federal Reserve from cutting rates when it meets next week but not so tepid that it reignited fears of recession in the world’s largest economy.
“In the end, the reading came in significantly below expectations and led to concern about a downturn in the US.”
Investors will receive their next instalment of major economic data later this week in the form of PPI data on Wednesday then CPI on Thursday. With the Federal Reserve meeting scheduled for next week, some investment banks are calling for a 50-basis-point interest rate cut.
The data released this week will play a significant role in determining the extent of the reduction in borrowing costs when voting members meet next week.
In the meantime, investors are happy to focus on lower borrowing costs and look past the implications of slowing US growth.
In the UK, investors continued to digest a government reshuffle that appears to have avoided any major short-term volatility in UK government debt markets.
“UK Prime Minister Keir Starmer will be hoping the large cabinet reshuffle will quell concerns about his authority and close a highly difficult political chapter,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Gilt yields eased back after the big moves were made, with some relief that Chancellor Rachel Reeves’ position appears secure.”
It’s a long road to November’s budget, and markets will be vulnerable to any signs of further mismanagement of the economy by Starmer’s government.
That said, the announcement of a partnership between FTSE 250 Vistry and the UK’s housing agency designed to build more homes has been taken well by investors and housebuilders rose on Monday.
Taylor Wimpey and Persimmon added around 1%. Vistry was 3% higher.
Marks & Spencer was the FTSE 100’s top riser after Citigroup raised their rating to a ‘buy’ with a 440p target.
Phoenix Group was firmly at the bottom of the leaderboard after the group released mixed results and announced it would rebrand as Standard Life after acquiring the business from Aberdeen. Phoenix Group was down 6% at the tme of writing.