Viral Post
FTSE 100 opened sharply lower on Wednesday as a stronger pound and renewed inflation concerns outweighed support from rising commodity prices. London’s blue-chip index was down 46.59 points, or 0.43%, at 10,765.07 shortly after 8 am. Sterling strengthened 0.15% to US$1.3560, close to its early high of US$1.3563.
A firmer pound can weigh on the internationally focused FTSE 100 by reducing the sterling value of overseas earnings. Oil prices moved higher, with Brent crude climbing 1.52% to US$99.41 a barrel and West Texas Intermediate gaining 1.19% to US$94.14. The advance towards US$100 may support BP and Shell but raises concerns about higher energy costs adding to inflation and keeping interest rates elevated for longer.
Gold edged 0.14% higher to US$4,445.19 an ounce, while silver gained 0.42% to US$67.28. Copper was virtually unchanged at US$6.7768 per pound, remaining close to recent record levels. The opening decline suggests investors are focusing on potential inflationary consequences of higher oil prices and the headwind from sterling, with commodity strength proving insufficient to lift the wider index. 7.00 am: Surging oil prices unsettle global markets.
The FTSE 100 is expected to open sharply lower as Brent crude’s advance towards US$100 a barrel fuels concerns about inflation and interest rates. IG expects London’s blue-chip index to fall approximately 51 points, or 0.5%, to 10,760. Brent crude traded around $99.01 a barrel after briefly approaching $99.70, following US strikes near Iran’s Kharg Island and attacks on Saudi Arabian energy facilities.
The escalating threat to Middle Eastern supplies pushed West Texas Intermediate above US$95 and weighed on global equities. Higher oil prices could support BP and Shell but are likely to pressure airlines, retailers, and other energy-intensive businesses. Wall Street finished firmly lower as investors considered inflationary consequences of the oil rally.
The Dow Jones Industrial Average dropped 1.2%, the S&P 500 declined 0.6%, and the Nasdaq Composite lost 0.3%. US market close: Government bond yields remained elevated. The US 10-year Treasury yield stood around 4.79%, while concerns about Britain’s public finances persisted after the UK sold a 30-year gilt at a record yield of 5.8168%.
Copper provided a potential counterweight for London’s miners after three-month prices reached a record $14,728 a tonne. Asian markets were mixed. Japan’s Nikkei 225 declined 0.3%, the Shanghai Composite slipped 0.1%, and Hong Kong’s Hang Seng fell 0.5%, while South Korean shares advanced.
Australia’s S&P/ASX 200 was marginally lower. Sterling remained firm at approximately $1.3551, creating an additional headwind for the internationally focused FTSE 100. Gold retreated to around $4,394 an ounce, while Bitcoin traded near $79,050.
Energean, Gym Group, and WAG Payment Solutions are scheduled to publish half-year results, while Frontier Developments and Pan African Resources are due to release full-year figures.
Source: Proactive Investors
