European stock markets are expected to start the week on a firmer footing after Iran and the US refrained from further military escalation over the weekend, easing concerns over disruptions to global energy supplies.
Futures indicate the FTSE 100 will open around 30 points higher (0.3%) at 10,765, building on Friday’s 0.9% gain, although London’s advance may lag some European peers as falling oil prices weigh on heavyweight energy stocks.
Brent crude slipped to US$92.03 a barrel on Monday morning from US$95.49 at Friday’s London close after Iran halted retaliatory attacks against US allies in the Middle East. Washington also signalled it would allow diplomatic negotiations to continue, reducing immediate fears of further conflict.
The decline in oil prices could pressure Shell and BP at the open, given their significant weighting within the FTSE 100.
Currency markets were relatively subdued. Sterling edged up to US$1.3352, while the euro strengthened to US$1.1405 against the dollar. US Treasury yields also eased slightly, reflecting a modest improvement in investor sentiment.
Asian markets traded positively overnight, with Hong Kong’s Hang Seng rising 0.8%, Australia’s S&P/ASX 200 climbing 1.3%, and both the Nikkei 225 and Shanghai Composite posting modest gains.
Gold continued to edge higher, trading at US$4,088.42 per ounce.
In UK corporate news, Serica Energy announced an agreement to acquire Pharos Energy in a deal valuing the company at approximately £146 million. Shareholders will receive around 28.67p in cash per share, alongside a 4.0p special dividend, taking the total value of the offer to 32.67p per share.
Chief executive Chris Cox said the acquisition supports Serica’s long-term strategy of expanding internationally while increasing reserves, production and cash generation.
Investors will also be watching the release of Germany’s Ifo Business Climate Index and US durable goods orders later on Monday.
Attention later this week will turn to interest rate decisions from the US Federal Reserve, the Bank of England and the Bank of Japan, alongside key inflation data from Australia and the eurozone.
On the UK corporate calendar, AstraZeneca publishes half-year results, while Vodafone issues a trading update.
