London share prices were flat early Monday, though the FTSE 100 was - just barely - holding onto the 8,000-point level, as a holiday in the US is likely to leave trading light.
Rising global political tensions were darkening the investment mood, as the US accused China of considering providing military aid to Russia.
Investors also are watching the progress post-Brexit negotiations over Northern Ireland, with UK Prime Minister Rishi Sunak coming under pressure from predecessor Boris Johnson.
The FTSE 100 index opened 4.96 points, or 0.1%, higher at 8,009.32. The FTSE 250 was up just 2.05 points at 20,090.98. The AIM All-Share was up 1.53 points, or 0.2%, at 867.23.
The Cboe UK 100 was up 0.2% at 801.91, and the Cboe UK 250 was slightly higher at 17,532.64, but the Cboe Small Companies was down 0.7% at 13,881.45.
In mainland Europe, the DAX 40 in Frankfurt was marginally lower. The CAC 40 in Paris was up 0.1%.
The Nikkei 225 in Tokyo and the S&P/ASX 200 in Sydney both closed up 0.1%.
Markets in China were more positive. The Shanghai Composite rose 2.1%. The Hang Seng was up 0.8% in Hong Kong.
Minutes from the Federal Reserve’s most recent policy meeting are released on Wednesday. Equity market investors will be looking for clues in the comments on the future of US interest rates.
On Friday last week, another two Federal Reserve officials signalled that more rate hikes are on the way, though one has a preference for the ‘25 basis-point path’, Bloomberg reported.
At separate events on Friday, Richmond Fed President Thomas Barkin and Fed Governor Michelle Bowman suggested rates still need to be pushed higher.
‘We’ll have to continue to raise the federal funds rate until we start to see a lot more progress,’ Bowman said in an event in Nashville, Tennessee, Bloomberg reported.
Barkin, meanwhile, told reporters that rates need to keep rising, though he prefers 25 basis-point increments.
The minutes will be of the January 31 to February 1 policy meeting.
‘After that meeting saw the pace of rate hikes slow to 25 basis points, the US dataflow has strengthened, with a string of upside surprises,’ commented Daiwa Capital Markets. ‘So, the balance of views on the [Federal Open Market Committee] to be revealed in the minutes might not necessarily be a wholly reliable guide to the current state of play.’
Elsewhere among central banks, the People’s Bank of China left its benchmark lending rate unchanged, an outcome in line with market expectations.
The People’s Bank of China held its one-year loan prime rate - which serves as a benchmark for corporate loans - at 3.65%. The five-year rate remained at 4.3%. It was the sixth successive month that the PBoC left rates unchanged.
The dollar was lower early Monday in London.
The pound was quoted at $1.2032, up slightly from $1.1999 at the time of the London equities close on Friday. The euro stood at UD1.0690, up from $1.0662. Against the yen, the dollar was trading at JP¥134.30, down slightly from JP¥134.37.
UK Prime Minister Sunak is set for his biggest political test yet as he presses to unveil a deal to fix issues with the Northern Ireland protocol, despite pushback from predecessor Johnson and unionists.
Downing Street said talks are ongoing to reach an agreement with the EU aimed at breaking the impasse over the contentious post-Brexit trading arrangements.
Number 10 denied reports suggesting the prime minister has been forced to delay an announcement - widely expected as early as this week - amid backlash from senior Tories and the Democratic Unionist Party.
The DUP has warned it would not support a deal retaining the oversight role of the European Court of Justice.
It is understood by PA that Sunak’s officials held talks with their Brussels counterparts on Sunday on how to give local politicians a greater say in the application of EU law in the region, addressing what unionists call the ‘democratic deficit’.
In London, Sports Direct-owner Frasers climbed 2.5% after announcing a new £80 million share buyback. It was the best large-cap performer in London.
The programme will conclude at the end of its financial year on April 30. No more than 10.0 million shares will be repurchased.
Darktrace climbed 2.3%. The cybersecurity firm said that as a ‘sign of confidence’ in its financial processes, it has turned to accountants Ernst & Young to conduct a third-party probe.
The decision follows Darktrace recently receiving scrutiny from short-seller Quintessential Capital Management, which criticised Darktrace’s management and said it is ‘sceptical’ about the its growth figures.
Darktrace Chair Gordon Hurst said: ‘The board believes fully in the robustness of Darktrace’s financial processes and controls. As a sign of that confidence, we have commissioned this independent third-party review by E&Y. We look forward to the outcome of this review.’
Keystone Law shares added 8.1%. Keystone said ‘favourable market conditions’ continued in its financial second half ended January 31.
Client demand ‘remained robust’, the law firm said. It said annual revenue and adjusted pretax profit will now top current market expectations.
Struggling on London’s junior AIM market was Verditek, dropping 28%.
The solar panels producer said it has received a notice for its distribution agreement with partner Bradclad Group to be terminated.
Verditek in October had said it could no longer be considered the ‘exclusive supplier’ to a joint-venture between Bradclad and Norwegian PVC single-ply roof membrane manufacturer Protan. It said at the time it had been made aware that Bradclad was working with another manufacturer.
Verditek added on Monday: ‘The company has been taking steps for the recovery of sums due under the agreement.’
Brent oil was quoted at $83.79 a barrel early Monday, up from $82.79 late Friday. Gold was quoted at $1,843.04 an ounce, up from $1,835.70.
Still to come on Monday’s economic calendar is a eurozone construction production reading at 1000 GMT.
In the background for markets this week are simmering global tensions, as the first anniversary of Russia’s invasion of Ukraine nears.
China is ‘strongly considering providing lethal assistance to Russia’, US Secretary of State Antony Blinken said on Sunday, noting that the US government was worried about possible arms deliveries from China to Russia.
Speaking to US broadcaster NBC, Blinken did not say what evidence this was based on, but did note that the US had no information that China has already provided lethal weapons to Russia.
Blinken’s statement comes as relations between the two world’s largest economies have taken a turn for the worse following a spat over a suspected Chinese spy balloon entering US airspace earlier in February.
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