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Pound loses further ground to dollar
lost more ground to the dollar on Monday, after stronger-than-expected jobs data last week saw expectations for further steep rate cuts by the Federal Reserve reduced.
The pound was trading at US$1.3068 as of late morning, having lost 0.43% for the day after hitting its lowest against the greenback in three weeks earlier on.
Friday’s non-farm payroll figures showed far more jobs were added across the US economy last month than expected.
Markets slashed expectations for another 50 basis point cut by the Fed in November as a result, in turn buoying the dollar.
This came after conflicting comments from Bank of England governor Andrew Bailey and chief economist Huw Pill last week over the pace of future rate cuts in the UK.
Bailey had said the bank could become “more aggressive” in cutting rates last Thursday, before Pill cautioned against reducing interest “too far or too fast” on Friday… Read more
Shell, BP among risers as oil continues climb
Shell PLC (LON:) and BP PLC (LON:) emerged among the FTSE 100’s biggest risers on Monday morning, aiding the index to a 16-point increase.
The heavyweights added 1.5% and 1.3% respectively to sit behind NatWest Group PLC (LON:) among the biggest winners on London’s blue-chip index by late morning.
Both had made headlines earlier on, with Shell cutting third-quarter guidance on lower refining margins due to lacklustre global demand, while reports emerged that BP was to ditch plans to reduce oil and gas output by 2030.
This coincided with an uptick in oil prices throughout the morning as benchmark gained a further 2.6% to reach US$79.48 a barrel as tensions in the Middle East continued to brew.
Eurozone investor confidence up despite German economic struggles
Investor sentiment across the Eurozone has picked up this month in spite of issues within the continent’s largest economy, Germany.
Sentix’s investor morale index came in at -13.8 in October, against -15.4 previously, with the rise coming after three consecutive declines.
This was as the current situation reading slipped to a four-month low, but future expectations indicators picked up.
“The downward trend in the economy has stopped for the time being,” Sentix said, “there are signs of easing in all regions of the world”.
The improvement came despite Germany’s economic woes, which were reflected through news on Monday of a 3.9% drop in factory orders in August, with Sentix noting the country remained “in recession mode for the time being”.
Gold regains after US rate cut bet pressure
Gold regained ground throughout Monday morning, after taking a knock early on as traders cut bets for further steep .
Come mid-morning was trading flat for the day at US$2,654 an ounce, having dropped as low as US$2,640 earlier on.
This followed last Friday’s non-farm payroll reading from across the Atlantic, which showed the US economy added 254,000 jobs in September, against the 147,000 expected.
Bets for another 50 basis point cut to base interest by the Federal Reserve in November, following September’s reduction, were subsequently slashed as recession concerns were further dialled down.
Gold appeared to come under pressure as a result, after its recent rally has seen record highs repeatedly topped this year.
Miners dropped on Monday on the back of gold’s earlier fall, with Endeavour Mining PLC (LON:) leading the day’s FTSE 100 losers, followed by Fresnillo PLC (LON:).
Markets across Europe in the red as German factory orders drop
Markets across Europe got off to a tough start on Monday morning, with Portugal’s PSI20 and Denmark’s OMXC 25 among the only indices in positive territory.
Germany’s was among the biggest fallers, dropping by 92 points, or 0.5%, early on following a further bout of poor economic data.
across Europe’s largest economy tumbled by 3.9% in August, statistics body Destatis reported on Monday.
This was worse than markets had been expecting, with the figure falling by 3.8% month on month after a string of large orders for the likes of aircraft, ships and trains in July, Destatis said.
The figures add to a gloomy picture forming around the German economy, which shrank between April and June ahead of an anticipated contraction over the full year.
“This suggests that the German economy will at best stagnate in the second half of the year,” Commerzbank’s economist Ralph Solveen noted.
Oil prices remain volatile on geopolitical tensions
Oil prices bounced on Monday as fears over escalations in the Middle East persisted while news of a Ukrainian strike on a Russian oil terminal emerged.
Benchmark Brent crude was up at US$78.62 a barrel on Monday morning, having dropped as low as US$77.45 earlier on.
This comes after oil looked on course to hit the US$80 mark last week, as fears over a return strike by Israel against Iran mounted, offsetting downward pressure on expectations of sluggish demand ahead.
Oil had climbed by 9% over the course of the week for the biggest gain since March 2023, with fears over tensions in the Middle East appearing to continue into Monday.
This coincided with confirmation of a Ukrainian strike against an oil terminal in Russian-occupied Feodosia, Crimea overnight, following reports of a fire at the site.
Wage growth slows as Budget fears loom
Wage growth slowed to a three-and-a-half-year low last month as firms placed recruitment plans on hold ahead of October’s .
KPMG and REC’s permanent salary index came in at 52.8 for September, against 54.4 previously, marking the third successive monthly drop.
Though this remained above the 50-point mark, which signals wages are growing, KPMG senior partner Jon Holt noted companies were holding off on recruitment ahead of the Budget on October 30.
“The slowing of hiring activity seen in September is to be expected as businesses […] wait for clarity on future taxation, business, and economic policy,” he said.
REC chief executive Neil Carberry added: “This is a picture of a jobs market waiting for a signal.
“Recruiters report that projects in client businesses are ready to go, but confidence is not yet high enough to push the button.”
Britain’s new Labour government has alluded to tax hikes in the Budget, having cited a £22 billion “black hole” in public finances, though these are not expected to affect national insurance, VAT, income or corporation tax in line with manifesto pledges.
