European stocks are set to open higher Monday after another solid session in Asia where investor optimism was fuelled by a quiet weekend of geopolitical risks and a stronger U.S. dollar.
Britain's FTSE 100 is expected to add around 0.4% at the opening bell, according to financial bookmarkers IG, while benchmarks in Europe are priced for modestly higher gains across the board. U.K stocks, however, will once again be blunted by the strength of the pound, which has risen around 3% against the greenback amid increasing signals of an imminent rate hike from the Bank of England.
"Until recently, I thought the appropriate response of monetary policy was to be patient, given modest growth and subdued underlying inflationary pressure," said BoE board member Gertjan Vlieghe Friday. "But the evolution of the data is increasingly suggesting that we are approaching the moment when Bank Rate may need to rise."
Friday's moves extend the pound's biggest rally since 2016 amid warnings from the BoE that business and investors are too complacent about low interest rates, which currently sit at 0.25%, the lowest in the Bank's near 300-year history, given the rapid increase in U.K. inflation.
The dollar itself was marked around 0.05% higher against a basket of six global currencies at 91.88 in overnight trading ahead of this week's two-day rate setting meeting of the Federal Reserve, where Chair Janet Yellen is expected to offer further details of the central bank's plans to unwind its $4.2 trillion balance sheet.
The dollar's gains once again supported regional stocks, with the MSCI Asia ex-Japan benchmark rising 0.1% by 06:00 London time and the yen softening to 1.1115 in Tokyo as equity markets were closed for the Autumnal Equinox Day holiday.
Global oil prices were little-changed from their Friday close in New York, with West Texas Intermediate crude futures for October delivery marked at $49.88 per barrel while Brent contracts for November were seen 3 cents higher at $50.65.
Last week, Houston-based energy services firm Baker Hughes (BHGE) - Get Baker Hughes, a GE Company Class A Report reported that U.S. oil and gas producers took eight rigs offline during the past week, bringing its total count to 936.
They also indicated that the oil rig count decreased by seven week over week to 749, while the natural gas rig count fell by one to 186 while the U.S. offshore rig count rose marginally from the previous week.
Early indications from U.S. equity futures suggest another solid session on Wall Street, with the Dow Jones Industrial Average poised for a 65 point, or 0.3%, gain at the opening bell and slightly higher percentage advances for the S&P 500 and the Nasdaq.