- FTSE 100 is set for subdued start to trading amid lower business confidence and dip in crude prices.
- Italy’s Giorgia Meloni meets Trump as she works on building relationship with new administration, helping lift sentiment towards Europe.
- Italy reported to be close to signing $1.5 billion deal with Space X.
- S&P 500 set for flat start to trading as eyes turn to monthly jobs report.
- Brent Crude falls back on dollar strength after hitting two and a half month highs.
Susannah Streeter head of money and markets, Hargreaves Lansdown:
‘’London’s blue-chip index is set for a subdued start to trading as investors assess falling confidence among UK businesses and oil prices come off recent highs. Sentiment towards European companies appear to be warming up a little following the Italian prime minister’s surprise meeting with President Trump, although wariness remains about the tariff threat.
The pessimism among many firms following the UK Budget has been underlined by the survey from the British Chambers of Commerce, which indicates that almost two-thirds are concerned about tax and the effect on their business in 2025. The looming increase in employers’ National Insurance contributions is playing on minds, with companies bracing for potential price increases through the supply chain. The report will be an unwelcome read for the government which has already been hit with disappointing growth figures, which showed a stagnation for the economy in the three months to September, then a contraction in October. Nevertheless, the infrastructure investment boost included in the Budget should help provide a tailwind for activity, and the expected reduction in interest rates is likely to offer relief to companies and consumers. KPMG has joined the OECD in forecasting that growth with increase by 1.7% this year, double the rate for 2024. Thanks to the minimum wage, many lower earners will have more money in their pockets to spend, which should also help retailers focused on value offerings.
Georgia Meloni’s courting of President Trump as he prepares to head for the White House may help insulate Italy from the worst of the tariff threats and could provide a cushion of support for the wider EU. There will be hopes the impact on the luxury goods sector will be more minimal thanks to these rounds of glad-handing. Her show of influence may add a little sheen of optimism to trading in Europe, with Italy’s FTSE MIB, the CAC 40 and the DAX expected to be positive in early dealing. The Italian Prime Minister’s surprise visit to the incoming President’s Mar-a-Lago resort in Florida was aimed at progressing talks on a raft of issues, with trade looking high on the agenda. Thanks to her blossoming friendship with both Trump and Elon Musk, Ms Meloni is shaping up to be a vital navigator to help steer EU nations through the fog of uncertainty. Italy appears to be on the front foot when it comes to Trump’s demand for nations to buy more American goods. The country is reportedly on the verge of signing a $1.5 billion deal with Elon Musk’s Space X, to provide secure communications to the government. These are the types of deals Musk and Trump want to see repeated elsewhere, although clearly some administrations will be more forthcoming than others. The S&P 500 looks set for a flat open with the focus returning to the direction of interest rate cuts. They are already expected to be sparse this year and Friday’s key jobs figure will provide a big piece of the jigsaw for policymakers to mull over as they assess just how hot inflation is set to run.
Brent Crude has dipped back after edging close to $77 dollars a barrel, levels not seen since mid-October. It had been propelled higher as a cold weather snap descended across the US and parts of Europe, adding to expectations of higher heating oil demand. Traders are also waiting on extra stimulus for China’s economy to be detailed by authorities. But the recent strength of the dollar appears to have led to this mini dip in appetite for crude and overall, the appetite for energy still remains uncertain, given the threat of tariffs from the US, and the knock-on effect on global growth.
