The FTSE 100 is set to open lower on Monday as renewed uncertainty over the Strait of Hormuz weighs on sentiment after Iran ruled out reopening the key shipping route unless the US meets a series of demands.
Futures indicate London’s blue-chip index will open around 30 points, or 0.3%, lower at 10,865.69. The FTSE 100 closed 0.3% higher at 10,901.09 on Friday, completing its fourth consecutive weekly gain.
Iran’s Revolutionary Guards said the Strait of Hormuz would remain restricted until Washington complies with demands including compensation for war damage, the lifting of sanctions, the release of frozen assets and an end to the US blockade of Iranian ports.
US President Donald Trump has meanwhile played down expectations of an imminent diplomatic breakthrough, reportedly saying Washington was only “semi-negotiating” with Tehran.
The renewed uncertainty pushed Brent crude higher to $83.94 a barrel, from $83.40 late Friday.
Sterling slipped to $1.3487, while the euro eased to $1.1550. US Treasury yields were broadly unchanged, with the 10-year yield at 4.65%.
UK Jobs Market Shows Signs of Improvement
Closer to home, fresh figures from KPMG and the Recruitment & Employment Confederation provided some encouragement over the UK labour market.
Permanent staff placements stabilised in July, with the relevant index rising to 50.0 from 49.1, while temporary billings remained in expansion territory at 51.9.
Temporary vacancies also increased for the first time in two years, accompanied by stronger pay growth for both permanent and temporary employees.
US Inflation Becomes Next Major Test
Investors are also looking ahead to Wednesday’s US inflation report following Friday’s surprisingly weak employment figures.
US nonfarm payrolls fell by 23,000 in July, compared with expectations for an increase of 80,000. Previous estimates for May and June were also revised sharply lower.
The weak jobs figures reduced expectations of another Federal Reserve interest rate increase and helped Wall Street finish Friday higher, with the S&P 500 gaining 0.6% and Nasdaq Composite rising 1.3%.
Attention now turns to US consumer price inflation, which is expected to ease to 3.4% in July from 3.5% in June.
Asian markets were mostly positive overnight. Japan’s Nikkei 225 jumped 2.1%, China’s Shanghai Composite gained 0.1% and Hong Kong’s Hang Seng rose 0.6%, while Australia’s S&P/ASX 200 slipped 0.3%.
Chinese inflation figures showed consumer prices rising 0.5% year-on-year in July, slowing from 1.0% in June and falling short of expectations.
Gold eased slightly to $4,340.71 an ounce, following Friday’s strong advance.
With the FTSE 100 ending last week just below the psychologically important 11,000 level, developments around Hormuz and Wednesday’s US inflation figures are likely to provide the key direction for markets in the coming sessions.
