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Negative start to the week as UK market weighs challenges ahead

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Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown:
  • FTSE100 opens down 13.8 points, following negative sentiment in the US and China
  • S&P500 closed down 0.6% on Friday, following concerns about the Fed’s next move
  • Chinese export growth at two year low, rising 3.9% in April
  • Crude Oil hold steady at $109 as investors weighed talk by the G7 to ban Russian oil imports, a cut in prices by Saudi Arabia and China’s ongoing lockdowns
  • Geopolitical tension continues in Ukraine, adding to subdued markets

Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown:

“The week has got off to a negative start for the UK’s market, a result of poor sentiment coming from the US and China. In the US, the trend has been negative for weeks, but had started to look brighter, before comments from the Bank of England at the end of last week about weak economic growth applied the brakes to momentum. Anxiety is stemming from the Fed’s next moves, with uncertainty creeping in about the scale and speed of interest rate hikes. All this comes at the same time as China grapples with ongoing lockdowns and the prevailing economic storm these entail. We saw Chinese export growth slow to two-year lows in April. That said, there have been tentative hints that China is stepping away from its blanket zero-Covid policy, which may mean an easing of the very tough conditions in the all-important production lines in the country.

There are of course ongoing geopolitical tensions, with the situation in Ukraine far from resolved. Victory Day in Russia is likely to increase tensions, as the world waits to hear President Putin’s long-awaited speech. Backlash against Russia has seen the oil price hold steady at the elevated level of around $109 a barrel, which is as the G7 pledged to ban Russian oil. Such a move isn’t wholly surprising given the backdrop, but such bold statements have been more than enough to keep the oil price high, and could be the source of further volatility.”

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