Energy markets were urged to continue pressure on inflation and higher interest rates outlook after Brent crude prices hit a three-year high today.
The FTSE 100 index is set to open largely unchanged, but sentiment will be further tested this week when the Wall Street banking giant releases third-quarter results.
Oil rally continues
Oil prices show some signs of rising from their multi-year highs, adding to more inflationary pressures at the start of another testing week for global markets.
Brent crude is trading up 1.6% to a new three-year high of $83.71 a barrel, with the US oil benchmark hitting a seven-year high of $80.31 a barrel after rising 5% last week on a spurt in natural gas prices. switch away.
The inflation outlook will be tested later this week along with data from the producer price index in the US and China. On Friday, there were further signs that a recovery in the US labor market looked to be running out of steam after the weakest non-farm payrolls data this year.
Most economists had expected the September result to provide the final piece of the saw for the US Federal Reserve to begin tapering its $120 billion-a-month asset purchase program, when it meets in a few weeks’ time.
Despite the weak figures, the impact of rising prices means there is still a lot of pressure for policymakers in the US and UK to consider early rate hikes.
Michael Hewson, Chief Market Analyst at CMC Markets, said: “These concerns have been expressed more strongly in recent weeks, with the Bank of England becoming more vocal in recent days.
In an interview with the Sunday Telegraph, external monetary policy committee member Michael Saunders said markets were right to start betting on rapid rate hikes due to growth in energy markets and labor shortages.
Hewson said: “After new chief economist Hu Pill expressed concern over long-run inflation, he is not alone in thinking along these lines, something that the UK appears to be particularly vulnerable to, while the Bank of England The governor of Andrew Bailey also appears to be leaning in that direction as well.”
The FTSE 100 index is expected to open flat at 7095 in a week when Wall Street’s confidence from the start of its third-quarter earnings season will be tested, including data from JPMorgan Chase and Citigroup.