Sterling steady as global stocks slide ahead of central banks

Sterling held relatively steady as global equity markets turned risk-off, with European equity futures pointing lower and Asian tech stocks tumbling more than 1% in South Korea and Taiwan. Bitcoin hovered near two-week lows, while the yen strengthened to around 154.80 per dollar on safe-haven demand ahead of the Bank of Japan meeting, reflecting caution across asset classes. Investors are also reassessing the medium-term policy outlook after the Federal Reserve’s recent rate cut, with market pricing diverging from official guidance and volatility rising into year-end.

Equities

The FTSE 100 closed 1.1% higher on Monday afternoon in London, extending gains into the start of the week as investors positioned ahead of an expected interest rate cut from the Bank of England later this week. The mid-cap FTSE 250 also rose, ending the session up 0.7%. Both indices had finished lower at the end of last week, making Monday’s advance a clear change in direction as financial stocks moved higher into the close.

Among UK-listed companies, life insurers led the gains. Prudential shares closed 3.2% higher on Monday after its Indian joint venture, ICICI Prudential Asset Management, confirmed that its $1.2 billion initial public offering was fully subscribed on the second day of bidding. The update reinforced investor confidence in the group’s exposure to faster-growing Asian markets. UK banking stocks also closed firmly higher, with the sector rising 1.7% by the end of the session, reflecting optimism around lower borrowing costs later this week.

TT Electronics shares fell sharply, closing 17% lower on Monday after DBAY Advisors, the company’s largest shareholder, said it would not make an offer for the business, ending speculation around a potential takeover battle involving Switzerland’s Cicor.

US technology stocks weighed on the broader market. ServiceNow shares closed 11.5% lower on Monday after reports that the company was in advanced talks to buy cybersecurity startup Armis, a move that raised concerns about the scale and cost of the potential deal.

Tesla shares finished 3.5% higher after chief executive Elon Musk said the electric vehicle maker was testing robotaxis without safety monitors in the front passenger seat, an update that drew renewed attention to its autonomous driving ambitions. IRobot posted the largest single-stock move of the session, plunging 72.7% by the close after the maker of Roomba vacuum cleaners filed for bankruptcy protection.

Healthcare stocks provided some support to US markets, with the S&P 500 healthcare sector closing 1.3% higher on Monday, even as information technology stocks fell 1%. Trading volumes on US exchanges were broadly in line with recent averages, while market breadth weakened, particularly on the Nasdaq, where declining stocks outnumbered advancers into the close.

Forex & Commodities

The US dollar and Japanese yen both traded firmer, as investors positioned ahead of a heavy run of central bank decisions and delayed US economic data. The yen moved up against the dollar to 154.7 per dollar early this morning, as markets focused on the Bank of Japan meeting on Friday, where a rate rise to 0.75% is widely anticipated. The dollar index edged higher after previously slipping to its weakest level since mid-October, while the greenback weakened against the offshore Chinese yuan, which strengthened to 7.038 per dollar, its firmest level since October 2024. Sterling was slightly lower in early trading, easing to 1.337 against the dollar as attention turned to the Bank of England’s policy decision later this week.

Gold prices edged lower early on Tuesday as caution set in ahead of key US labour market and inflation releases. Spot gold was down in early trading at $4,290 per ounce, retreating from levels close to its October peak near $4,380. Silver prices fell to $63.03 per ounce after touching a record high late last week, while platinum and palladium both moved higher, trading at $1,806 and $1,583 respectively this morning.

Oil prices fell further in Asian trading on Tuesday. Brent crude slipped to $60.21 a barrel and US West Texas Intermediate dropped to $56.47 a barrel, extending losses from Monday. The move followed renewed optimism around a potential Russia–Ukraine peace agreement, which raised expectations that sanctions on Russian oil exports could be eased. Weak Chinese factory output and retail sales data released on Monday added to pressure on prices, reinforcing concerns about demand growth in the world’s largest oil importer.