FTSE struggles for direction as energy markets head higher

·3-min read
Office workers and commuters walk through Canary Wharf in London during the morning rush hour. Picture date: Wednesday October 6, 2021. (Photo by Victoria Jones/PA Images via Getty Images)
Office workers and commuters walk through Canary Wharf in London during the morning rush hour, as Fed and BOE officials prepare for a week of announcements that could move markets. Photo: Victoria Jones/PA Images via Getty Images

Stocks were mixed in Europe on Monday as another big week for markets dawned on London. 

The FTSE 100 (^FTSE) was supported by an uptick in energy stocks, which gained ground after a volatile week of trade.

Investors continue to digest the fallout of several big central bank decisions made across the US and UK recently.

"While last week saw some doubts creep in for bulls, they are likely to get back in the driving seat before long, with rising demand being met by an unwillingness to ramp up output in both the US and OPEC," said Joshua Mahony, senior market analyst at IG.

On Thursday, the Bank of England decided to hold base UK interest rates at a historic low of 0.1%, a move that knocked both markets and the pound. The US Federal Reserve also moved to taper its bond buying programme — an action that had been heavily signalled.

UK investors will also be watching the first readings of third quarter GDP data for the UK for signs of strength in the COVID-19 recovery. 

By the afternoon, the FTSE 100 (^FTSE) had reversed losses to trade 0.1% higher — it closed flat. Germany's DAX (^GDAXI) was down 0.1% and France's CAC (^FCHI) ticked up 0.1%. 

The pound (GBPUSD=X) was 0.3% lower at 8.20am to trade at $1.3462. By 10.30am it had regained ground and by the close it was up 0.5%. 

"Today's appearances by various Fed officials, including Fed Chair Jerome Powell and Fed governor Richard Clarida, are likely to have an impact on stock markets," said Naeem Aslam. chief market analyst at AvaTrade. "Similarly, Andrew Bailey, governor of the Bank of England (BoE), is scheduled to speak today as well."

Bailey is set to speak after the day's close in an on-the-record Q&A, which could move markets on Tuesday. 

“This week brings Goldilocks back to the table and she’ll be dipping her spoon into the bowl of inflation goodness and deciding if last month’s temperature in the United States was more to her liking," said Danni Hewson, AJ Bell financial analyst.

"The US Fed has certainly indicated it would prefer a slightly cooler morsel but its intention to begin tapering has pretty much been priced in by investors, so unless there is a major upward shock markets should take the figures in their stride."

Wall Street opened in the green, despite muted moves in Europe. The S&P 500 (^GSPC) was up 0.1% in early trade. The Dow (^DJI) also moved 0.2% higher and the Nasdaq (^IXIC) was up 0.2% by the close in London. 

Read more: UK questions Microsoft, Twitter, Snapchat, TikTok over scam ads

This week, the US government will release all-important inflation figures. Investors will be looking for indications of moves from the Fed to support the economy, or reduce stimulus. 

Overnight in Asia, indices had a mixed day. Hong Kong's Hang Seng (^HSI) and Japan's Nikkei (^N225) had both fallen 0.4% by the end of the session. The SSE Composite (000001.SS) ticked up 0.2%. 

The moves came after data released on Sunday showed China’s October exports rose 27.1% over a year earlier, though that eased off the previous month’s 28.1% growth.

Chinese stocks face an uncertain end to the year as anti-virus controls hold back factory and consumer activity.

This week, China’s ruling Communist party is set to hold a full meeting of its leaders, military leaders and provincial party bosses. It is the sixth plenum during the latest five-year political cycle.

Watch: What is inflation and why is it important?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting