- FTSE 100 higher in early trade boosted by another positive streak on Wall Street.
- Miners gain on hopes for global growth prospects, but housebuilders fall back.
- Investors’ hopes are high for Goldilocks’ return, but bears could prowl again.
- Crude prices dip but remain largely elevated amid Middle East conflict concerns.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’Investors are still in good spirits, toasting hopes of interest rate cuts in the US coming sooner rather than later next year. The latest spurt of positivity on Wall Street is helping to fuel gains for the FTSE 100 in early trade, with mining stocks in particular pulsing higher. Housebuilders, Barratt Developments and Berkeley Group, are on the back foot, amid signs that consumers are still showing signs of resilience in their spending patterns, in the post-Christmas sales. The Bank of England is showing more wariness than the Fed about the trajectory for inflation, so any sign that interest rates might stay higher for longer, in the UK, aren’t read well for the housing market.
Hopes rise in the US for a Goldilocks economy.
Goldilocks is being counted on to make an appearance next year, with inflation cooling but the US economy staying warm enough, though there is still a risk that the bears return to prowl again. Indices have been powered higher, partly by optimism about a soft landing for the US and there is still a risk of the economy slowing more sharply as the full effect of higher borrowing costs filter through. The frenzy for all things AI has been a huge force pulsing through the S&P 500 and the Nasdaq, even though the trajectory of demand for artificial intelligence products and services is harder to map, particularly given that many risks to corporations haven’t been fully addressed yet, and there is potential for snarl ups in supply chains.
Oil dips but remains largely elevated over Middle East risks.
A barrel of Brent crude has edged below $80 pushing down energy giants, Shell and BP in early trade. With Maersk now scheduling tankers resuming their passages via and Suez Canal and the red sea, thanks to the reassurance of a US-led maritime force in the region, it’s helped dispel some immediate concerns about supply issues. However, tensions remain elevated, with Middle Easter leaders warning about the conflict widening, with Israel’s border with Lebanon, a worrisome hotspot, following attacks by Hezbollah. So, crude prices are staying largely elevated, especially with the US economy showing signs of resilience, boosting the outlook for global demand.
