FTSE 100 preview: Muted start ahead after oil price drop

The UK benchmark index looks set to open marginally lower this morning, after oil suffered a nearly four-percent fall overnight. On the corporate front, Wm Morrison Supermarkets (LON:MRW) will be the first FTSE 100 supermarket to update investors on its recent performance, to be followed by rival J Sainsbury (LON:SBRY) tomorrow and Tesco (LON:TSCO) on Thursday.

IG’s opening calls suggest that the Footsie will start the session 0.04 percent lower at 7,235 points. The index is expected to open marginally in the red this morning, following a drop in the oil price yesterday amid investor concerns whether output cuts by major exporters will prove to be enough to support the market.
“It’s unusual to have these agreements last for very long because inevitably someone cheats,” Daniel Morris, senior investment strategist at BNP Paribas Investment Partners, told Reuters.

Asian shares have been subdued this morning, while US stocks closed mixed last night, pressured by the oil price drop.
At home, the Footsie gained 27.72 points to end yesterday’s session 0.38 percent higher at 7,237.77, with concerns about potential ‘hard Brexit’ pressuring the pound. Glencore (LON:GLEN), which benefitted from a rating upgrade at Barclays, was the session’s biggest riser in percentage terms, adding 3.55 percent to close at 298.70p.

“The FTSE is still currency-led, with Brexit uncertainty over the weekend grinding it higher,” said Mark Ward, head of execution trading at Sanlam Securities UK, as quoted by Reuters. “I don’t think these markets will go lower anytime soon.”
There are no major macroeconomic releases out of Europe to provide direction this morning. In corporate releases, Morrisons is expected to post underlying sales growth of 1.1 percent for the nine weeks to January 1 when it updates the market on its recent performance.