London stocks are expected to open slightly lower on Monday, with the FTSE 100 forecast to decline around 14 points as investors assess renewed tensions in the Middle East, falling oil prices and a sharp sell-off in US technology shares ahead of a busy week for economic data and corporate earnings.
Futures indicate the FTSE 100 will open 0.1% lower at around 10,716, following Friday’s modest 7.71-point gain, which saw the blue-chip index close at 10,729.78.
Brent crude fell sharply to $110.16 a barrel, compared with $117.61 at Friday’s London close, although oil prices remained elevated amid continuing uncertainty over energy supplies from the Middle East.
The decline came despite fresh warnings from Iran over the potential consequences of renewed military conflict with the United States.
An Iranian military spokesman warned over the weekend that any new war could last longer than previous fighting, suggesting Washington would not necessarily control the duration or conditions of a future conflict.
Regional security concerns were reinforced by reports that another vessel had been struck by projectiles in the Persian Gulf on Sunday, according to the UK Maritime Trade Operations agency.
The developments underline the continuing risks to shipping and energy infrastructure, even as crude prices retreat from recent highs.
Wall Street suffered heavy losses on Friday, with the Dow Jones Industrial Average falling 1.1%, the S&P 500 declining 1.8% and the technology-heavy Nasdaq Composite plunging 2.9%.
The sell-off reflected growing investor concerns about the enormous amounts being spent on artificial intelligence infrastructure and whether major technology companies can generate sufficient returns from those investments.
Swissquote analyst Ipek Ozkardeskaya described October as a period of market rotation and heightened investor caution, with strong corporate earnings failing to eliminate concerns surrounding AI spending.
The Nasdaq 100 has fallen almost 10% from its October record high, compared with a decline of approximately 3% for the S&P 500 from its recent peak.
The contrasting performances suggest investors have increasingly shifted towards defensive companies and dividend-paying stocks while reducing exposure to highly valued technology businesses.
The US midterm elections on Tuesday, 3 November, represent another potential source of market uncertainty, with investors assessing how the results could affect government policy and future investment priorities.
Meanwhile, Asian equities delivered a mixed performance on Monday.
Japan’s Nikkei 225 declined 0.4%, while Australia’s S&P/ASX 200 slipped 0.6%.
However, China’s Shanghai Composite advanced 1.1% and Hong Kong’s Hang Seng gained 0.6%, providing some support for regional market sentiment.
In currency markets, sterling strengthened slightly to $1.3402 against the US dollar, compared with $1.3396 at Friday’s London close.
The pound weakened against the euro to €1.1977, while the euro advanced to $1.1185 against the dollar.
Gold recovered modestly to $3,907.05 an ounce, up from $3,898.22 on Friday, as investors continued assessing geopolitical risks and uncertainty across financial markets.
Monday’s economic calendar includes manufacturing purchasing managers’ index readings from the UK, eurozone, Germany, France and the United States, providing fresh insight into industrial activity and business confidence.
The figures will be closely watched for indications of how elevated energy prices, inflation and borrowing costs are affecting manufacturing conditions.
Corporate earnings also remain in focus, with Kosmos Energy scheduled to release third-quarter results and Apple due to publish its full-year figures later in the United States.
Apple’s results will attract particular attention following last week’s heavy selling across technology stocks, with investors scrutinising profitability, demand and capital investment.
The FTSE 100 faces a cautious start to November as investors balance lower oil prices against continuing geopolitical uncertainty and weakness in US technology markets.
While the decline in crude prices could ease some inflation concerns, it may also weigh on major UK-listed energy producers, including BP and Shell.
Attention will now turn to manufacturing activity data, Apple’s earnings and developments in the Middle East, alongside the upcoming US midterm elections and Thursday’s Bank of England interest rate decision, as investors assess the direction of global equity markets during the first week of November.
