Stocks to rise; UK house prices drop

(Alliance News) - Stocks in London are set to open higher on Monday, as investors look ahead to a key US inflation reading later in the week.

IG says futures indicate the FTSE 100 to open up 21.3 points, 0.3%, at 7,381.85 on Monday. The index of London large-caps closed down 95.12 points, 1.3%, at 7,360.55 on Friday.

After some hawkish rhetoric from US Federal Reserve officials last week, the market will be paying especially close attention to Tuesday's consumer price index report.

"While it seems improbable that anything less than a significant escalation in the current incoming price data would be sufficient to reconsider the possibility of a rate hike in December, this week's upcoming inflation figures from the US will likely reinforce the Federal Reserve's position that it is premature to conclusively determine whether consumer price growth in the world's largest economy is firmly and sustainably on track to reach the targeted 2%," said SPI Asset Management's Stephen Innes.

Sterling was quoted at USD1.2234 early Monday, higher than USD1.2200 at the London equities close on Friday. The euro traded at USD1.0687 early Monday, higher than USD1.0670 late Friday.

Against the yen, the dollar was quoted at JPY151.77, up versus JPY151.49.

In Asia on Monday, the Nikkei 225 index in Tokyo closed marginally higher. In China, the Shanghai Composite was flat while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney closed down 0.4%.

In the US on Friday, stocks on Wall Street rallied, with the Dow Jones Industrial Average up 1.2%, the S&P 500 up 1.6% and the Nasdaq Composite 2.1%

Over the weekend, the prospect of a US government shutdown returned to the fore, ahead of a key deadline to agree on funding.

The Republican party revealed an unconventional temporary plan to fund the US government, with little room to manoeuvre it through a deeply divided Congress just days ahead of a potential shutdown.

US media reported that unusual play would see some bills needed to keep the government open passed via a short-term bill until January 19, while the rest would be rolled over until February 2. It is aimed at buying Congress time to pass individual spending bills – and does not provide funding for Israel, Ukraine and border security, according to the reports.

The White House slammed the proposal as "a recipe for more Republican chaos and more shutdowns."

Meanwhile, credit ratings agency Moody's on Friday downgraded its outlook on US debt to negative from stable, one week before crucial budget negotiations in Congress. For now, it has maintained its Aaa rating on US government debt.

Gold was quoted at USD1,939.14 an ounce early Monday, edging up from USD1,938.67 on Friday.

Brent oil was trading at USD80.82 a barrel, lower than USD81.12.

In local news, UK house prices suffered the chunkiest November loss in five years, numbers showed, though findings suggest 2023 has not been as tough a year for the sector as predicted.

According to Rightmove, UK house prices declined 1.7% on a monthly basis this month, the worst November fall since 2018.

Still to come in Monday's economic calendar, there's a trio of speeches in the UK, including words from Bank of England policymakers Sarah Breeden and Catherine Mann, and UK Prime Minister Rishi Sunak's annual foreign policy speech at Lord Mayor's Banquet.

The local corporate calendar has a trading statement from BAE Systems, while property investor British Land reports half-year results.

By Elizabeth Winter, Alliance News senior markets reporter

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