The FTSE 100 is poised to make gains on Monday morning, according to futures data from investment platform IG, reversing some of Friday’s sharp declines.
The blue-chip index closed 1.5 per cent lower on Friday, dragged down by falling oil prices that weighed heavily on energy majors BP (BP.L) and Shell (SHEL.L).
Airtel Africa (AAF.L) suffered the sharpest losses on Friday, slumping by more than 11 per cent after it emerged that the flotation of its payments arm, Airtel Money, had been scaled back.
Brent crude, the international benchmark for oil prices, fell by nearly one per cent to $103 per barrel at the end of last week, offering some relief to equity markets.
Investors were encouraged by suggestions that disruption to Saudi Arabian oil pipelines from Houthi attacks will be worse than initially feared, contributing to the price retreat.
Despite the dip, oil prices remain near their highest level since May, and tensions in the region show little sign of easing in the near term.
Iran’s recent language has done little to soothe investor nerves, after it warned the US of “painful” retaliation if Washington launches new attacks.
Russ Mould, AJ Bell’s investment director, said: “A pullback in oil has dialled down fears about inflation and helped government bond yields ease from their recent multi-year highs.”
Mould added: “We have seen this story play out in microcosm multiple times over the months since the Iran conflict started in February, with a more concerted move lower for oil likely to require more solid evidence of diplomatic progress in the short term.”
He noted: “However, there will be relief that equity markets have successfully navigated a week where the US Federal Reserve put up rates and the Bank of England kept its powder dry but signalled clearly that a UK rate hike might not be far away.”
UK borrowing costs remain a pressing concern for investors this week, having hit their highest levels since 2007 in recent weeks, adding further uncertainty to the outlook.
Markets will be carefully monitoring any fresh signals from the Bank of England regarding the timing and pace of future interest rate increases as pressure builds.
The broader economic backdrop remains complex, with rising energy costs continuing to test UK businesses and households even as equity markets attempt to stabilise.