Pound Steady as Traders Boost $2.78B Short Bets

Sterling held firm despite traders increasing short positions to $2.78 billion, reversing bullish bets held since February. Japanese stocks hit record highs and Australian shares stayed near peaks after the US and China extended their tariff truce by 90 days, avoiding steep new duties. The Reserve Bank of Australia delivered a widely expected 25-basis-point rate cut while UK hiring intentions fell to their weakest since the pandemic.

Equities

The FTSE 100 rose 0.4% on Monday, supported by gains in financial and consumer-related stocks. Life insurers’ shares reached their highest intraday level since March 2023, while the banking index closed at a one-week high. British American Tobacco closed 2% higher and Diageo added 1.8%. Marks & Spencer climbed 3% after resuming click-and-collect orders for clothing, nearly four months after suspending the service following a cyberattack and data theft.

Defence sector shares ended flat after falling to a one-week low earlier in the day. Oxford Nanopore Technologies fell 3% after confirming CEO Gordon Sanghera plans to step down by 2026. Online trading platform Plus500 dropped 5.7% after reporting weaker profit margins and maintaining its annual forecasts.

In the US, Wall Street indices closed lower on Monday. The Dow Jones fell 0.45% to 43,975.09, the S&P 500 lost 0.25% to 6,373.45, and the Nasdaq dropped 0.3% to 21,385.40. Nvidia and Advanced Micro Devices each edged lower, down 0.35% and 0.28% respectively, after it emerged that the companies had agreed to allocate 15% of their China sales revenue to the US government as part of a deal to continue semiconductor exports to China.

Micron Technology gained 4% after raising its forecast for fourth-quarter revenue and adjusted profit. Intel rose 3.5% following reports that CEO Lip-Bu Tan visited the White House, days after President Trump publicly called for his removal.

TKO Group surged 10% after securing a $7.7 billion agreement with Paramount to exclusively distribute UFC events for the next seven years. Across the wider market, declining issues outnumbered advancers on both the NYSE and Nasdaq, with volumes light compared to the average over the past 20 sessions.

President Trump extended the pause on sharply higher US tariffs on Chinese imports for another 90 days, a move affecting a range of sectors including technology. This came as the current trade agreement between Washington and Beijing nears its expiry, with talks continuing to avoid triple-digit duties on goods. In the UK, investors also looked ahead to Tuesday’s labour market data, with the jobless rate expected to remain at 4.7% in the three months to June.

Forex & Commodities

The US dollar strengthened against the yen early this morning, trading at 148.40, while holding steady against the euro at $1.1622 and easing slightly against sterling at $1.3426. The dollar index remained at 98.476 after two sessions of gains, with traders focused on the US Consumer Price Index (CPI) report later today. Economists expect core CPI to have risen 0.3% in July, taking the annual rate to 3%.

Spot gold edged up to $3,348 per ounce this morning, partially recovering from a 1.6% drop late on Monday after President Trump confirmed imported gold bars would be exempt from tariffs. Silver, platinum and palladium also rose modestly in early trade.

Oil prices rose this morning after the US extended a tariff truce with China to 10 November, avoiding the imposition of steep duties on goods. Brent crude was at $66.77 per barrel, while US West Texas Intermediate traded at $64.04.