FTSE 100 little changed; US stocks to open mostly lower

• FTSE 100 climbs 13 points
• US indices to open mostly lower
• Bond yields continue to rise

After Friday’s euphoria in the US Monday brings the comedown, as it often does.

Although the Dow Jones industrial average is expected to nudge 14 points higher to 31,510 the S&P is expected to give back more than a quarter of Friday’s gains, opening 20 points lower at 3,842 while the tech-heavy Nasdaq 100 is staring at a 170 point slide to 12,499 when trading starts.

Rising bond yields and inflation fears are making US investors nervous.

“The reason why equities respond negatively to interest rates is because it pushes up the cost of capital,” explained Peter Garnry, the head of Equity Strategy at Saxo Group.

“Some of it is offset by rising growth expectations as rising interest rates do have a link to rising growth expectations. The overall impact is negative from rising interest rates and if inflation accelerates and stays above 3% for an extended time, the overall effect on equity returns gets increasingly worse. As a result, investors today do have to think hard about how the equity portfolio stands against inflation and how sensitive the portfolio is to rising interest rates,” Garnry suggested.

There is no news on the macroeconomic front for US traders to get excited about and thus far not much in the way of corporate nerw flow, other than agreeing to buy Laird Performance Materials from private-equity outfit Advent International for a cool US$2.3bn in cash.

In London, the FTSE 100 has finagled its way back into positive territory, rising 13 points (0.2%) to 6,634.

11.00am: That Monday morning feeling

London’s leading equities are now lower on balance despite indications that consumer confidence is on the rise in the UK.

The FTSE 100 surrendered early gains and was down 6. points (0.1%) at 6,24.

A YouGov/CEBR survey of consumer confidence resulted in the relevant index rising to 105.4, up from 103.4 the month before and the highest level since the pandemic got its teeth into the UK economy.

Improving confidence is encouraging news for hopes #consumers will play a leading role – underpinned by very high household savings ratio – in robust #UK #economic recovery developing as restrictions on activity are progressively eased over coming weeks https://t.co/4HMPi7tEuU

— Howard Archer (@HowardArcherUK) March 8, 2021

“The latest rise in the consumer confidence index underlines the resilience of households throughout this third national lockdown,” said Kay Neufeld, the head of forecasting at the Centre for Economics and Business Research (CEBR).

Meanwhile, the service sector’s confidence also rose in February, according to the Business Trends report from accountant and business consultant, BDO.

BDO’s Services Optimism Index rose to 94.13 in February from 86.60 in January; a reading of 100 is considered a “par” score.

As with the YouGov/CEBR survey, that’s the highest reading since March of last year and suggests that the vaccine roll-out is having an impact on the outlook of those still around to receive it.

“The speed of the vaccine rollout across the UK has given businesses a much-needed shot of relief,” said Kaley Crossthwaite, a partner at BDO.

Having said that, BDO’s Manufacturing Optimism Index eased a tad to 83.99 from 84.26 the month before.

Despite the Footsie’s fall, educational publishing company () was enjoying a rare day in the sun, rising 4.2% to 792.2p on the back of its full-year results.

Dan Lane, an analyst at Freetrade, gave a textbook example of why it is tricky making a call on share price reaction before the market opens.

“It’s getting harder and harder to make the investment case for Pearson. Even avid backers like Nick Train have admitted to sticking around more due to sentiment than reason. A laboured…