London’s blue-chip index opened around 41 points lower on Monday, pulling back from Friday’s closing level of 10,901.09 despite broadly positive sentiment elsewhere.
The retreat comes even as Asian markets pushed strongly higher and Wall Street ended last week on a high note, with momentum failing to cross the Atlantic.
Wall Street’s Friday session saw the S&P 500 close at a fresh record high, while the Nasdaq gained more than 1% to round out an impressive week for US equities.
The catalyst was a weaker-than-expected US jobs report, which cooled expectations that the Federal Reserve would press ahead with another interest rate increase.
The Bureau of Labor Statistics reported 23,000 jobs lost in July, with growth figures for both May and June revised downward as well.
Odds on a Fed rate rise in September dropped sharply to around 43%, down from 64% just a week earlier, according to Bloomberg data.
Asian markets took their cue from Wall Street, with Tokyo climbing 2%, driven by gains in Kioxia, Tokyo Electron, and Advantest as chipmakers led the charge.
Seoul also rallied, with SK Hynix and Samsung joining the broader semiconductor surge, while Hong Kong, Taipei, Shanghai, Wellington, and Jakarta all pushed higher.
The complicating factor, however, is crude oil, which has repeatedly unsettled markets throughout the summer months.
Oil prices jumped around 1% after Iran’s Revolutionary Guards insisted on Sunday that the Strait of Hormuz would remain shut until Washington meets a list of demands.
That announcement punctured growing hopes that the Middle East crisis was beginning to wind down, adding fresh uncertainty to an already fragile global outlook.
Higher crude prices typically benefit London’s heavyweight energy companies, lending some support to those corners of the FTSE 100 index.
However, the broader inflationary implications of rising oil are what is weighing on sentiment across the rest of the market, unsettling investors and analysts alike.
The dollar has also clawed back its Friday losses and continued gaining ground against the yen, which surged earlier this month after US and Japanese authorities staged a rare joint intervention to support the currency.