FTSE 100 expected to decrease as Reeves deals with pressure in London market

Stock markets in London are anticipated to open lower as the week kicks off, with Chancellor Rachel Reeves facing heightened scrutiny in Westminster and Asian markets showing a mixed start to trading.

According to IG, futures suggest that the FTSE 100 will open 0.1% lower at 9,731.40 on Monday. The London large-cap index closed slightly higher at 9,720.51 on Friday. Meanwhile, the pound was down at USD1.3215 early Monday compared to USD1.3236 at Friday’s close, while the euro remained stable at USD1.1595.

Over the weekend, calls were made for the UK Financial Conduct Authority to investigate Reeves for potentially misleading the public. Opposition leaders raised concerns about her statements regarding a GBP20 billion financing gap before the government’s autumn budget. This controversy emerged following the revelation by the Office for Budget Responsibility that they had informed Reeves about a smaller spending gap back in September.

In the US, Wall Street closed higher on Friday, with the Dow Jones Industrial Average, S&P 500, and the Nasdaq Composite all recording gains. Looking ahead, the focus is expected to shift to PMIs and eurozone inflation figures this week, according to Michael Brown, Senior Research Strategist at Pepperstone.

US President Donald Trump disclosed that he has chosen the next Federal Reserve chair and expects to announce the nominee soon. Trump hinted at advocating for rate cuts through the nomination. In addition, tensions escalated between the US and Venezuela, with Trump confirming recent communication with President Nicolas Maduro amid military action speculations.

In Asia, the Shanghai Composite and Hang Seng index started the week positively. However, Chinese factories reported softer activity for the eighth consecutive month in November, with the official manufacturing purchasing managers’ index still in contraction territory. Japan’s manufacturing activity also continued to contract, albeit showing some improvement.

Risk appetite was subdued, as indicated by price actions in various markets. The head of the Bank of Japan signaled a possible policy interest rate adjustment, reflecting a pace lag behind the curve. Australia’s manufacturing sector rebounded in November, with new orders and hiring picking up.

Gold and Brent oil prices saw slight increases, with gold trading at USD4,232.30 an ounce and Brent oil at USD63.56 a barrel early Monday. In the corporate and economic calendars, several manufacturing PMIs from different countries are set to be released along with financial results from various companies.

Overall, the markets are keeping a close eye on Reeves’ accountability, global economic indicators, and corporate performances as the week unfolds.