Stocks to fall but pound rises ahead of BoE

(Alliance News) - Stocks in London are set to open lower on Monday, with a Bank of England decision ahead, and as developments in US-China relations are also in focus.

IG says futures indicate the FTSE 100 to open down 30.5 points, 0.4%, at 7,612.22 on Monday. The index of London large-caps closed up 14.46 points, or 0.2% at 7,642.72 on Friday - ending last week 1.1% higher.

The pound was on the front foot ahead of the Bank of England's interest rate decision on Thursday, with the bank expected to enact a 25 basis point hike. There will be UK inflation data on Wednesday.

Sterling was quoted at USD1.2823 early Monday, higher than USD1.2819 at the London equities close on Friday.

"The Bank of England, not for the first time, has allowed inflation expectations to get out of control," said CMC Markets analyst Michael Hewson.

"This was despite many warnings over the last 18 months that they were acting too slowly, even though they were the first central bank to start hiking rates."

The euro traded at USD1.0940 early Monday, higher than USD1.0926 late Friday. Against the yen, the dollar was quoted at JPY141.50, down a touch versus JPY141.59.

There will also be interest rate decisions from the People's Bank of China on Tuesday, and the Swiss National Bank on Thursday morning.

Meanwhile, financial markets in New York are closed on Monday for the Juneteenth holiday, which is likely to suppress trading volumes across the globe somewhat.

In the US on Friday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.3%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.7%.

Over in Asia on Monday, equities were weaker, despite seemingly positive geopolitics developments.

US Secretary of State Antony Blinken met with his Chinese counterpart Qin Gang at the start of his two-day trip to Beijing, a visit aimed at rebuilding the cratering relationship between the world's two largest economies.

A series of meetings with high-ranking government representatives are planned before Blinken - the most senior US official to visit China in years - leaves on Monday. It remains unclear whether he will meet with Chinese leader Xi Jinping.

The Nikkei 225 index in Tokyo was down 1.3%. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was 1.3% lower. The S&P/ASX 200 in Sydney was up 0.5%, however.

The heightening of tension between the US and China has taken its toll on business confidence in recent months. The Financial Times reports that AstraZeneca is mulling a spin-off of its Chinese business and listing it in Hong Kong, to better insulate the unit from the geopolitical friction between China and the US and its allies.

Citing sources familiar with the talks, the FT said the separation might not take place, or a Shanghai listing is also possible.

Brent oil was quoted at USD75.61 a barrel early in London on Monday, little changed from USD75.62 late Friday.

Gold was quoted at USD1,957.26 an ounce, down against USD1,960.83.

In Monday's UK corporate calendar, there are full-year results from Triple Point Energy Transition and a trading statement from Finsbury Food.

By Elizabeth Winter, Alliance News senior markets reporter

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