London starts the week unwilling to chase last week's small gain. Futures pointed to a slightly softer open for the FTSE 100 after a weak finish on Wall Street and another uneasy weekend in the Gulf. The index closed Friday at 10,729.78, up 0.4 per cent on the week. The 10-year gilt ended that session at 5.299 per cent. Sunday's note set out why that easing mattered.
Brent crude was at 111.84 dollars a barrel by 00:11 GMT, down 1.59 dollars, or 1.4 per cent, from late Friday. West Texas Intermediate was at 102.56 dollars, down 1.56 dollars, or 1.5 per cent. A lower oil price helps the inflation story John Healey is trying to sell. It is also a direct weight on Shell, now the largest company in the index, and on the rest of the energy group that gives the FTSE its character.
Why oil moved, and why it did not move enough
The UK Maritime Trade Operations agency reported that a vessel was hit by projectiles in the Persian Gulf on Sunday. Over the weekend an Iranian military spokesperson warned the United States that any new conflict would be likely to last longer than the last one, and that Washington would not set the terms on which it ended. Traders marked crude down from Friday's peak. They did not mark it back to the ranges of a calm year. Insurance, tanker routes and the chance of a longer disruption are still in the price.
That is the split the City has lived with since the Iran fighting rewrote the oil market. Households notice the petrol price. The FTSE notices Shell and BP. Monday's dip in crude is large enough to cool the energy trade at the open, and not large enough to change the Budget arithmetic on its own.
Monday's Numbers Before the Cash Session Settles
- FTSE 100: Friday close 10,729.78. Week ending 30 October: plus 0.4 per cent. Futures: a modest dip at the open.
- 10-year gilt: 5.299 per cent at Friday's close.
- Brent: 111.84 dollars at 00:11 GMT, down 1.4 per cent. WTI: 102.56 dollars, down 1.5 per cent.
- UK final manufacturing PMI for October: 9.30am. Consensus 52.8, in line with the flash, and above the 50 line.
- Bank Rate: 3.75 per cent. Next MPC decision: Thursday 5 November.
The number at 9.30am
S&P Global's final UK manufacturing PMI for October is due at 9.30am. The consensus is 52.8, matching the earlier flash and staying in expansion. France, Germany, the eurozone and, later, the United States publish factory surveys on the same morning. A reading above 50 says purchasing managers still see output growing. It does not say they are comfortable with energy costs. For the FTSE 250 and for manufacturers outside the oil majors, the domestic print is the cleaner signal. For gilts, a firm survey keeps Thursday's Bank meeting live without telling the committee what to do.
The Bank has held Bank Rate at 3.75 per cent. Thursday is the next decision, with the Budget now a fact rather than a rumour and with headroom in the fiscal forecast put at 15 billion pounds in 2029-30. Dealers will read the PMI for whether factories are absorbing higher costs or starting to cut back. They will not get a wages print or a services number until later in the week.
What else is on the card
Away from the open, ministers have launched a 700 million pound Strategic Sites Accelerator, aimed at six to 10 industrial locations and at crowding in private capital. That is an investment story, not an index story, for this morning. The American diary is louder later: midterm elections on Tuesday, and non-farm payrolls on Friday. US clocks went back an hour on Sunday, so New York cash hours shift an hour later in London time from today.
The practical reading for a British investor at the open is narrow. Oil is a little cheaper and still historically high. Factories are expected to be growing, not booming. Gilts have a week to wait for the Bank. Until 9.30am, the FTSE is trading the Gulf and Wall Street's mood, not a new fact about Britain.