The FTSE 100 started the week in a holding pattern as investors digested a blowout Non-Farm Payrolls reading on Friday and braced for more data in the week ahead.
The benign trading conditions on Monday were reflective of a busy week for central banks. The Fed minutes are due for release on Wednesday, and the ECB will decide on rates on Thursday. In addition, traders will be delivered the latest US CPI, which could have huge ramifications for stocks.
Interest rate concerns have again crept in, with central banks suggesting they are no closer to cutting rates. Major economic indicators in the US, UK and some European countries suggest underlying resilience amid higher rates. In short, traders are concerned the economy is too strong to justify central banks cutting rates.
At the beginning of a trading week that is likley to be driven by macroeconomic events, the FTSE 100 was trading at 7,924, up 1.7%.
“Markets have taken a moment to reflect on last week’s barrage of data points which caught people by surprise,” said Russ Mould, investment director at AJ Bell.
“With little on the corporate reporting agenda and many people enjoying annual leave during the Easter school holiday, the pause has come just at the right time. It provides an opportunity to weigh up what’s really going on and what could happen next.
“In a nutshell, we’ve had hotter than expected jobs data and an oil price that has been sneaking higher, implying that the economy is resilient despite higher interest rates while at the same time sounding an alarm that the pace of inflation could speed up, due to the respective forces. That certainly gives the Federal Reserve a lot to think about – indeed, it strengthens the argument for rates to remain at their current level for a lot longer.”
Unsurprisingly, there were few major movers on Monday, and the top fallers and gainers continued recent trends.
The shakeup at Entain is continuing to support its shares which were 5.1% higher at the time of writing. Entain was the FTSE 100 top riser.
Momentum in building in mining stocks. After a buoyant week last week, Rio Tinto, Glencore, and Anglo American had another good showing on Monday as commodities ticked higher.
Profit-taking in Marks & Spencer persisted for a second day, and shares fell 2.5%.
Higher interest rates are not great for Ocado shares and growing interest rate concerns fed directly into another 2.4% decline on Monday.