HL commentary as it happens

Brent Crude oil prices slide below $63 per barrel

Brent Crude oil prices slid back down below $63 per barrel this morning, erasing some of yesterday’s gains as tentative hopes for a Russia-Ukraine peace deal emerge, raising the prospect of a lift on Russian sanctions in an already oversupplied market, a theme that’s overshadowing rising expectations of a US rate cut.

Retail sales and consumer confidence data results

On the inflation side, September’s Producer Price Index is expected to have notched up a 0.3% increase after falling back 0.1% in August. Retail sales growth in September is expected to have slowed from 0.6% to 0.4% but the Conference Board’s Consumer Confidence Index (a drop of 1.1 points to 94.6 expected) will be a more relevant number as retailers start the countdown to Christmas.

The other key piece of the puzzle is this week’s rolling four-week employment report by ADP which at the last count showed job losses of 11,250 per week on average. There’s a lot to process here but, in essence, it will need either a hotter-than-expected PPI number, or punchier read out on the demand and jobs front, to derail hopes of a further rate cut by the Fed in December, with futures now implying over an 80% chance of a quarter point drop next month.

US futures suggest gains will hold at today’s open

Friday’s bounce on Wall Street continued higher on Monday, with US futures suggesting these gains will hold at today’s open. Tech stocks led the way with the NASDAQ Composite surging 2.7%, its strongest day since mid-May bringing the index back to within 5% of the all-time highs seen a month ago.

Today’s attention will turn to key US economic data releases before traders start to wind down ahead of Thursday’s Thanksgiving pause. Markets will be looking for further reassurance that the soft-landing narrative isn’t gravitating in the direction of stagflation. But the public numbers coming out today are more backward looking than usual, delayed by the earlier US government shutdown.

FTSE 100 slips ahead of UK Budget

After a quiet start to the week the FTSE 100 has edged down a few points as the UK braces for one of the most hotly-anticipated Downing Street Budgets in recent history. If rumours of an imminent cut to the medium-term growth outlook by the Office for Budget Responsibility prove to be true, that makes the delicate balancing act of fiscal prudence and stimulating the economy more precarious than ever.

The UK Budget dominates sentiment

The UK Budget, due on Wednesday, dominates domestic sentiment with mixed expectations from both investors and business leaders. This morning, CBI (Confederate of British Industry) boss Rain Newton-Smith is due to deliver a speech at the group’s annual conference which is expected to urge the Chancellor to support British business and the UK economy. It comes a week after former Bank of England chief economist Andy Haldane raised concerns that Budget rumours alone have stunted business spending and, in turn, economic growth.

US stocks ended the week up on hopes of a rate cut

Once again, Fed policy is leading the market – as markets do an about turn on last week’s bearish sentiment. The new optimistic tone is down to comments from New York Fed President John Williams on Friday that a bank cut is still on the cards next month, despite sticky inflation and mixed jobs data. The S&P 500 rallied 0.98% to close on Friday, and the Russell 2000 and NASDAQ also closed up. But it was a rose-tinted end to one of the worst trading weeks in months, thanks to swirling concerns that the macro data simply isn’t compelling enough to warrant a rate cut next month, and that despite recent share price falls AI stocks remain overvalued.

Asia markets have continued some of Friday’s positive momentum, with the Shanghai Stock Exchange Composite and the Nikkei trading just up from flat. The European open is off to a positive start with the FTSE 100 up 50 points this morning.