London stocks are expected to open lower on Tuesday, with the FTSE 100 facing renewed pressure from political unrest in France and weakness across Asian markets, as investors await UK unemployment figures and further clues about the Bank of England’s interest rate outlook.
Futures indicate the FTSE 100 will open about 47 points, or 0.4%, lower at 10,717.69, after Monday’s 117.21-point decline left the blue-chip index at 10,764.69.
European markets remain unsettled by widespread protests in France, where violent demonstrations over living costs and education have increased political uncertainty and placed pressure on government bond markets.
French authorities have introduced partial curfews in several cities, including parts of Paris and Lille, following weekend unrest that resulted in widespread damage and thousands of arrests.
Swissquote analyst Ipek Ozkardeskaya warned that rising borrowing costs and widening government bond yield spreads in France, Italy and Portugal were reflecting growing investor concern over European fiscal stability.
The yield gap between French and German government bonds has exceeded 135 basis points, with political uncertainty and the approaching French presidential election adding to pressure on French debt.
Meanwhile, UK unemployment figures are due at 7am BST, with economists expecting the jobless rate to remain at 4.9% in the three months to August.
The figures will be closely watched ahead of Wednesday’s inflation report, with both releases expected to influence expectations for the Bank of England’s next interest rate decision.
Sterling strengthened to $1.3334 against the dollar in early trading, compared with $1.3316 at Monday’s London close, although it edged lower against the euro to €1.1864.
The pound remains sensitive to economic data as investors assess whether persistent wage growth and inflation could justify further increases in UK borrowing costs.
Wall Street delivered a mixed performance on Monday, with the Nasdaq Composite rebounding 1.1% and the S&P 500 gaining 0.4%, while the Dow Jones Industrial Average slipped 0.1%.
Technology stocks recovered some of last week’s losses as attention shifted towards upcoming quarterly earnings from major US companies, including Netflix, Tesla and Meta Platforms.
However, Asian markets weakened on Tuesday, with Japan’s Nikkei 225 falling 1.4%, Hong Kong’s Hang Seng declining 1.2% and China’s Shanghai Composite losing 0.5%. Australia’s S&P/ASX 200 slipped 0.3%.
Mining group BHP fell 1.6% in Sydney after reporting a 19% year-on-year decline in quarterly copper production to 400,700 tonnes.
The company attributed the decline to planned lower ore grades, maintenance and operational disruption, including severe weather in Chile. Iron ore production increased 3.7% to 66.5 million tonnes, while full-year guidance remained unchanged.
Commodity markets were mixed, with Brent crude rising to $109.96 a barrel from $108.29 on Monday, while gold eased to $4,132.36 an ounce.
US Treasury yields edged lower, with the benchmark 10-year yield slipping to 5.12% from 5.13%.
Geopolitical developments also remain in focus following comments from US President Donald Trump about a potential meeting with Russian President Vladimir Putin and Chinese President Xi Jinping.
Trump indicated that possible talks could address nuclear weapons and the war in Ukraine, although no agreement on a summit has been confirmed.
On London’s corporate calendar, investors will be watching trading updates from Anglo American and Bunzl, alongside the latest UK labour market figures.
The FTSE 100 faces a cautious opening as European political uncertainty and concerns over interest rates weigh on sentiment, with UK employment data and Wednesday’s inflation figures likely to provide important direction for markets over the next two sessions.
