(Alliance News) - Stocks in London are set to open lower on Monday, with investors looking ahead to the week's US inflation print following last week's mixed set of economic data from the world's largest economy.

IG says futures indicate the FTSE 100 is set to open down 19.0 points, 0.3%, at 7,670.61 on Monday. The index of London large-caps closed down 33.46 points, 0.4%, at 7,689.61 on Friday.

"After several weeks of gains and having finished 2023 on a high note it was inevitable that at some point markets would probably take a step back, having been given a lift into year-end by a belief that rate cuts were coming in early 2024. Last week saw a modest correction to that narrative with a rebound in EU inflation in December as well as a solid US payrolls report," said CMC Markets' UK chief market analyst Michael Hewson.

Friday's strong-looking US nonfarm payrolls data showed that the US economy added more jobs than expected in December. This led some to dial back expectations of interest rate cuts from the Federal Reserve in 2024, though a 25 basis point cut in March is still widely anticipated.

The focus for the week now shifts to the US consumer price inflation reading on Thursday.

The dollar gained ground against major currencies over the weekend.

Sterling was quoted at USD1.2708 early Monday, lower than USD1.2738 at the London equities close on Friday. The euro traded at USD1.0941, lower than USD1.0966. Against the yen, the dollar was quoted at JPY144.32, up slightly versus JPY144.29.

In the US on Friday, Wall Street ended slightly higher, with the Dow Jones Industrial Average and the Nasdaq Composite both rising 0.1%, while the S&P 500 added 0.2%.

US lawmakers announced a bipartisan agreement Sunday on fiscal year 2024 funding totals that marks a step towards averting a looming government shutdown in a presidential election year.

The agreement on a roughly USD1.6 trillion "topline" federal spending limit was announced by Republican House Speaker Mike Johnson and Democratic leaders in Congress after weeks of negotiations.

Meanwhile in the UK, Prime Minister Rishi Sunak has hinted that pre-election tax cut giveaways will be made on the back of "difficult decisions to control welfare".

The PM said it was his "priority" to "keep cutting people's taxes" after a 2 pence cut in national insurance was introduced on Saturday, having been announced in the autumn statement. Meanwhile, over the weekend, Chancellor Jeremy Hunt said he does not know if he can afford to cut taxes.

In Asia on Monday, financial markets were closed for Coming of Age Day. In China, the Shanghai Composite was down 1.2%, while the Hang Seng index in Hong Kong was down 2.1%. The S&P/ASX 200 in Sydney closed down 0.5%.

Gold was quoted at USD2,032.55 an ounce early Monday, lower than USD2,051.00 on Friday.

Brent oil was trading at USD77.67 a barrel, lower than USD78.82.

Monday's economic calendar has German factory orders due shortly, with eurozone consumer confidence and retail sales readings at 1000 GMT.

By Elizabeth Winter, Alliance News deputy news editor

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