- FTSE creeps up as hopes of avoiding US government shutdown grow.
- UK GDP shrinks unexpectedly, down 0.1% in January.
- US futures pointing up after stocks hit new 6-month lows.
- Gold approaches $3,000 per oz.
- US consumer confidence in focus today.
- Brent crude rallies above $70 per barrel.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100’s opened up a touch this morning after a rebound in Asian stocks overnight. They were buoyed by hopes that the US government would avoid a shutdown of non-essential services after Senate leader Chuck Schumer said he would vote to pass the latest funding bill.
However, disappointing UK GDP figures may keep a lid on the size of any bounce today. There’s growing pressure for chancellor Rachel Reeves to pull a bunny out of her bonnet in this month’s Spring Statement and provide a boost to the economy. Real gross domestic product contracted 0.1% in April compared to forecasts of 0.1% growth with manufacturing and construction output declines more than offsetting an expansion in services output.
The FTSE’s limited exposure to technology has helped it avoid too much fallout from the sell-off in the US and so far this year. It’s still holding its head more than 3% above water. In contrast, US stocks endured another bruising session sinking to fresh six-month lows as investor fears grow that tariff escalation could lead to a recession. Sector-wise, there were few pockets of refuge with utilities being an island of green in a sea of red. Gold’s also working hard to retain its safe-haven status at a best-ever price of over $2,930 per ounce.
US futures suggest today’s open will follow global markets upwards. The preliminary University of Michigan’s Consumer Sentiment index is a key data point for today. A further fall below the 63.2 expected today is unlikely to provide too much scope for a rate cut by the Fed, which looks all but certain to leave borrowing costs unchanged next week. But any sign of a further dip in confidence could further spook the market.
Brent crude prices are back over $70 per barrel propped up by fresh sanctions by Washington on Iranian oil and shipping. But tariff fears continue to dampen the demand outlook with the International Energy Agency now predicting a surplus that could reach 600,000 barrels per day by the end of the year, with the US producing at record levels and OPEC+ set to start pumping more crude out of the ground.
