FTSE 100 has opened higher, buoyed by mining stocks.
Crude oil prices rise as reports indicate American forces could seize Iranian oil tankers.
Expectations for interest rate cuts from the Fed increase after consumer confidence among Americans falls.
Gold prices head higher as the dollar weakens amid safe-haven demand.
AI jitters continue, with the wealth management sector hit by fears that agentic tools helping sort tax affairs will eat into revenues.
Tale of two toymakers: Mattel shares slide as magic continues at Hasbro.
Susannah Streeter, Chief Investment Strategist, Wealth Club said, “The Footsie is heading higher in early trade, clawing back Tuesday’s losses, as another climb in precious metals prices pushes mining stocks higher. Investors are also focusing on hopes that borrowing costs will be lowered in the United States – the world’s largest economy.
“Given the multi-national focus of the FTSE 100, American resilience matters to valuations on the index. The key US jobs report is out later, which is expected to show a gradual cooling in the labour market. The ideal scenario is that new hires continue to tick up as expected, indicating economic growth is still purring, but that wage growth eases again, giving the Federal Reserve the scope to cut rates, offering relief to businesses and households.
“But if hiring undershoots forecasts, it’s set to add to concerns of a bleaker scenario for the US economy ahead. The latest consumer confidence snapshot indicates pessimism is spreading among middle – and lower-income households, which has also supported expectations for two interest rate cuts from the Fed this year.
“Geopolitical tensions in the Middle East remain high, despite ongoing negotiations between the US and Iran. Rumours are swirling that American forces may be given the green light to seize Iranian freighters if little progress is made on a deal to curtail Iran’s nuclear capability and ambitions.
“If talks break down, fresh strikes on Iranian targets are expected. This has again raised supply concerns, pushing up oil prices, with Brent crude, the benchmark, nudging $70 a barrel. A build-up in crude stockpiles in the US is keeping a lid on gains for now. Inventories rose sharply last week according to the American Petroleum Institute, up by 13.4 million barrels, compared to a fall of 11.1 million at the previous count. This indicates a significant drop in demand for energy, given it’s the biggest build-up in stocks since 2023, so there will be a close eye on upcoming data to see if this is a blip or part of a trend.
With the risks of conflict erupting in the Middle East still a clear and present danger, it’s kept up demand for safe havens like gold and silver. The precious metals have made fresh gains, as demand keeps flowing from central banks, financial institutions and individual investors. A more downbeat reading than expected about the US economy from the US jobs report later could spark a fresh move into safe havens and push metals prices even higher.
“Fresh casualties from AI advances are falling on the investment landscape. This time, wealth management companies have been caught in the crossfire as artificial intelligence services are unleashed. The big reveal from tech start-up Altruist Corp, which is led by former Wall Street professionals, is a new tool helping financial advisers personalise tax strategies for clients and deal with all the admin. The worry is that this is just the tip of the iceberg and fresh efficiencies will be unleashed by AI to disrupt the financial advice and investment industry and reduce the fees which can be charged. As the AI cards are shuffled, the pile of potential losers is mounting up, and speculation about which sector will be hit next is rife.
“For now, the toy industry appears more immune to big AI disruption, given the ongoing demand for collectibles and franchise models for play in the physical world. But fans can still be fickle as trends wax and wane. A tale of two toymakers is emerging in the latest round of corporate results. Mattel, the Barbie and Hot Wheels manufacturer, saw its shares drop sharply in after-hours trade. There was no dressing up its sales figures, which missed expectations after a highly disappointing performance over the festive period.
“The tariff turmoil disrupted orders amid cautious consumer spending, with discounting hurting profitability. In contrast, Hasbro unwrapped a bumper set of numbers, helped by its best sellers being so integrated into the digital, gaming and collectible worlds. Monopoly, Magic: The Gathering, and its Nerf guns remain hugely in demand. The signing of a multi-year partnership with Warner Bros Discovery to become the global primary licensee for the Harry Potter franchise is also whetting investor appetite, given the company’s prowess in cross-selling across the fantasy fanbase.”
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