Trump-Zelensky meeting ahead, Fed rate outlook in focus - what’s moving markets

Economic

Summary:

Markets this week focus on Trump-Zelensky talks in Washington amid Russia concerns, Powell’s Jackson Hole speech on rates, Palo Alto Networks’ earnings, and rising gold as investors seek safety.

stock futures were muted ahead of a high-stakes meeting between President Donald Trump and Ukrainian President Volodymyr Zelensky in Washington. The outlook for the Federal Reserve’s interest rate trajectory remains in focus as well, with minutes from the central bank’s July meeting and Chair Jerome Powell’s speech at a much-anticipated event set to come later this week. Elsewhere, Palo Alto Networks is due to report following the closing bell on Wall Street.

Futures muted

U.S. stock futures were subdued on Monday, as investors looked ahead to a week of potentially key developments in Federal Reserve interest rate policy and gauged the outlook for an upcoming U.S.-Ukraine meeting.

By 03:23 ET (07:23 GMT), the Dow futures contract had slipped by 97 points, or 0.2%, S&P 500 futures had fallen by 7 points, or 0.1%, and Nasdaq 100 futures were mostly unchanged.

The main averages on Wall Street were mixed at the end of trading on Friday, with the focus on the prospect of impending Fed rate cuts and a crucial talks between President Trump and Russian counterpart Vladimir Putin.

Touching a fresh intra-day high was the blue-chip Dow Jones Industrial Average, which joined the benchmark S&P 500 and tech-heavy Nasdaq Composite in reaching a new all-time peak at some point last week. The S&P 500 and Nasdaq finished the session lower, however, due largely to a slide in technology, financials, industrials, and utilities stocks.

FOMC meeting minutes, Powell speech ahead this week

Traders are now gearing up for the release on Wednesday of minutes from the Fed’s last policy gathering in July, when the central bank chose to keep borrowing costs steady at a range of 4.25% to 4.5%.

Yet the decision was met with the rare dissent of two Fed officials for the first time in decades. Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman both advocated for a rate reduction, arguing that it was necessary to help prop up a softening labor market.

Subsequent data has shown that U.S. jobs growth was significantly weaker than anticipated last month, while the totals for June and May were revised sharply lower. Meanwhile, retail sales rose strongly, following an unexpectedly steep uptick in producer prices.

These figures, coupled with relatively restrained consumer price indicators, have painted a complex picture of a possibly slowing labor market and some tariff-driven -- albeit relatively muted -- inflationary pressures.

All this comes as Trump’s actions have also cast doubt over the reliability of U.S. government data and led some analysts to predict a surge of interest in private-label numbers. Trump sparked these worries after he dismissed the commissioner of the agency charged with collecting the statistics, citing without evidence that the downward revisions in the latest jobs report were designed to hurt him politically. He later nominated the chief economist from the conservative think tank Heritage Foundation to lead the agency.

Stepping into these crosswinds will be Fed Chair Jerome Powell, who will deliver a closely-watched speech at an annual symposium in Jackson Hole, Wyoming on Friday. Powell has long advocated for a more cautious approach to policy actions, but markets -- who are themselves penciling in a rate cut at the Fed’s next meeting in September -- are curious to see if his opinions have shifted after the recent data deluge.

Zelensky to meet Trump

Ukraine’s Volodymyr Zelensky is due to meet with Trump in Washington on Monday in a bid to arrange the outlines of a potential peace deal.

But worries remain that Trump could try to use the talks to drive Zelensky into a settlement agreement that has been viewed as favorable to Russia. Zelensky has already appeared to dismiss the contours of proposals presented to Trump by Putin at a summit in Alaska on Friday, which included Ukraine losing a chunk of its eastern Donetsk region.

Zelensky, who will be flanked by leaders from a host of European countries as he meets with Trump, has said he supports a "swift and reliable" termination to the more than three-year-old conflict, but said Russia must be willing to end the war "it started."

Trump, for his part, said in a post on his Truth Social platform that Zelensky can "end the war with Russia almost immediately, if he wants to, or he can continue to fight."

"[T]he Ukraine situation seems to be entering a highly fluid state, and there could be additional developments in the days, weeks, and months ahead," analysts at Vital Knowledge said in a note to clients.

They added that, from a markets perspective, the Trump-Putin talks in Anchorage did not feature any of the major outcomes investors had been bracing for, such as a complete ceasefire or "draconian secondary tariffs on China."

Palo Alto Networks to report

On the earnings front, cybersecurity firm Palo Alto Networks is expected to headline the slate of July-quarter returns after the closing bell on Monday.

The group is seen posting fiscal fourth-quarter adjusted earnings per share of $0.89 on revenue of $2.5 billion, according to Bloomberg consensus forecasts.

It will be the first report after Palo Alto bought Israeli rival CyberArk Software in a roughly $25 billion deal in July -- the largest such purchase in the company’s history.

While it was viewed as a push by CEO Nikesh Arora to help the business take advantage of artificial intelligence-fueled demand for digital security solutions, analysts flagged concerns around Palo Alto’s ability to fold a platform of CyberArk’s size into its existing operations.

Palo Alto has completed the acquisitions of at least seven firms over the last two years.

Gold rises

Gold prices were higher in European trade on Monday, recovering from a more than two-week low as safe havens remained in vogue amid dialogue over the Russia-Ukraine war.

Uncertainty before the Jackson Hole central bank symposium this week also favored gold and weighed on the dollar, as markets maintained bets that the Fed will cut rates next month.

Spot gold advanced by 0.6% to $3,355.47 an ounce, while gold futures for October rose 0.5% to $3.400.55/oz by 03:22 ET. The yellow metal had fallen to an over two-week low last week.

source :investing

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Adam

Stocks

MARKET WRAPS

European stocks were lower at the start of the week, with shares in renewable companies bucking the trend and rising in opening trade after the U.S. published better-than-expected guidelines on which projects will qualify for wind and solar tax credits.

European leaders were travelling to Washington to join with Ukrainian President Volodymyr Zelensky in meeting Trump on Monday, and are expected to push back against Russian efforts to dictate peace terms in the war.

A resolution could be a boon for markets if it reduces geopolitical uncertainty and buffers global energy supplies, creating a more stable environment for trade after months of turmoil related to U.S. tariff policy.

Stocks to Watch

Novo Nordisk shares were rising after the U.S. approved another use for Wegovy.

U.S. Markets:

Stock futures pointed to a muted open.

This week's set-piece event is the Jackson Hole central-bank gathering in Wyoming, slated for Thursday through Saturday.

Investors will be glued to the Federal Reserve Chair's speech, hoping for insight into whether the central bank might kick off interest-rate cuts in September.

The Fed is also set to release minutes from its July meeting, and investors will seek further clues as to the health of the consumer as the reporting season effectively wraps up with results from big-box retailers, including Home Depot, Target and Walmart.

Forex:

The dollar rose marginally as investors awaited Jackson Hole.

Sterling could break above the key $1.36 resistance level if U.K. inflation data on Wednesday exceed expectations, Convera said.

Bonds:

Long-end eurozone government bond yields recovered, with 30-year Bund yields off from Friday's multi-year high.

The big moves in eurozone rates were coming from the long end of the curve, where both fiscal concerns and Dutch pension reforms were putting upward pressure on yields, ING said.

"While these structural drivers are acting on the back end, markets will let economic data determine the way forward for shorter maturities."

RBC Capital Markets has been running an outright hedged euro 5-30-year curve steepener in its portfolio since last year.

And while it said the drivers and catalysts of last week's moves--with weakness in long-end bonds in particular--remained a topic for debate, RBC found there were potentially new catalysts at work as well that aided this very recent steepening move in particular.

"These significant technical breakouts add further conviction to our long-standing structural curve steepening views and could be indicating that we will see more of this to come sooner versus later."

AXA Investment Managers said that Treasury yield volatility had been even more contained this summer than is typically the case, despite the concerns about the Fed, inflation, and the long-term budget situation.

The fact that 10-year Treasury yields were hovering around 4.25% showed demand was strong, it added.

Goldman Sachs continued to favor longs in front-end Treasurys, as markets continue to price in a Fed rate cut in September.

"U.S. rates remain in a holding pattern having cleared the latest batch of inflation news without any real fireworks."

While the base case for a September cut remained on solid footing, it might take a definitive signal from the Fed or corroboration of a weaker labor market backdrop to price in a faster cadence of cuts.

Energy:

Oil prices were mixed and fell further earlier in the session following the Alaska summit between Trump and Putin, after the meeting's tone lowered the risks of stricter sanctions on Russia and its energy flows, ING said.

Trump said he would hold off secondary tariffs on China for buying Russian oil, while bearish oil fundamentals will likely drive prices moving forward, and Monday's meeting Zelensky will be closely watched for further developments, it added.

Metals:

Gold futures ticked higher, though they remained within a narrow price range in relatively thin trading.

U.S. tariff de-risking and Russia-Ukraine peace talks were among factors capping safe-haven demand for gold, Phillip Nova said, adding it expected the metal to stay range bound and sensitive to headlines, with the market toggling between bearish on gold if geopolitical stress eases and bullish if real yields fall.

ANZ said the precious metal's price fall on week appeared temporary pointing to macroeconomic and geopolitical risks intensifying in the second half.

Waning trust in U.S. assets and volatile geopolitics should encourage central banks to further diversify reserves into gold, it added, which should see gold breach record highs later this year.

EMEA HEADLINES

European Leaders to Back Zelensky in Washington, Hoping to Counter Putin

BRUSSELS-European leaders will travel to Washington with Ukrainian President Volodymyr Zelensky to meet with President Trump on Monday, aiming for unity in pushing back against Russian efforts to dictate peace terms in their war.

The leaders of France, Germany, Italy, Britain, Finland, the European Union and the North Atlantic Treaty Organization said they would join Zelensky at the White House. Zelensky on Sunday traveled to Brussels to meet with European Commission President Ursula von der Leyen, a top EU leader, and hold a video call with the other leaders to prepare for the meeting with Trump at the White House.

Jeweler Pandora Not Planning Fresh Price Hikes as Demand Shrugs Off Tariffs, CEO Says

Danish jeweler Pandora has no plans for price hikes on top of those already implemented after not seeing any hit on U.S. demand due to President Trump's tariffs, its chief executive said.

The company raised prices globally three times over the past year and is carrying out a cost-cutting program in a bid to mitigate pressures on profitability from the tariff fallout and higher costs for gold and silver in a tough consumer environment.

MTN Group Raises Midterm Target, Reshuffles Executive Committee

MTN Group raised its midterm target for service revenue growth and reshuffled its executive committee as part of a review of its strategic priorities.

The South African telecommunications group said Monday that it is now targeting growth in service revenue-a closely watched metric for the industry-of at least high teen percentages over the medium term. It previously targeted growth of at least mid-teens.

GLOBAL NEWS

Global Economy Took Tariff Hike in Its Stride, But Stronger Headwinds Are Ahead

The global economy appears to have taken a sharp rise in U.S. tariffs and increased uncertainty about the future of the international trading system in its stride, but faces stronger headwinds as tax rates continue to climb.

As more countries release figures for economic growth that cover the second quarter of this year, a clear pattern has emerged. Those that grew rapidly in the first quarter as U.S. businesses raced to build up inventories ahead of higher tariffs slowed in the second quarter as those duties were imposed.

Taiwan Shares Close at Record High

Taiwan shares hit a new record high as investors cheer easing trade tensions and a brighter outlook for the island's major tech exporters.

The benchmark Taiex index ended 0.6% higher at 24482.52 on Monday, topping its previous closing high in July 2024.

More National Guard Soldiers Head to D.C. and Prepare to Carry Weapons

More National Guard troops are heading soon to Washington, D.C., and they are preparing to start carrying weapons in the coming days, officials say, a major shift that comes days after President Trump said he was deploying them to "take back" the capital from what he described as violent criminals.

Defense officials previously had said the 800 National Guard soldiers deployed wouldn't be armed, unlike many federal law-enforcement agents sent to the capital. They also weren't to have weapons in their vehicles. "Weapons are available if needed but will remain in the armory, " the U.S. Army said in a press release Thursday.

Israelis Hold Nationwide Protests and Strike to End Gaza War

TEL AVIV-The families of Israeli hostages held in Gaza led nationwide protests and a strike calling for their loved ones to be freed and for an end to the war in Gaza, a sign of growing domestic pressure to wrap up the fighting even as Israeli Prime Minister Benjamin Netanyahu says he plans to expand it.

Protesters blocked big highways across the country on Sunday morning-the start of the working week in Israel-as part of demonstrations that took place in more than 300 locations and drew hundreds of thousands of Israelis, according to organizers. Major Israeli universities and some businesses and tech companies said they would strike for the day in support of the families. More than 30 people were detained for disrupting public order, according to Israeli police.

Source: morningstar

Risk Warnings and Disclaimers

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Glendon

Economic

Cryptocurrency

Goldman Sachs Predicts Fed Rate Cuts in 2025

Goldman Sachs predicts the Federal Reserve will cut interest rates three times in 2025, starting September, due to weaker tariff impacts and a softening labor market.

This forecast could enhance risk sentiment and potentially buoy cryptocurrency markets, affecting assets like Bitcoin and Ethereum with anticipation of Federal Reserve policy easing.

Goldman Sachs has revised its forecast, anticipating the Federal Reserve will cut interest rates three times in 2025. The decision comes as part of an accelerated timeline due to weaker-than-expected impacts of tariffs on inflation.

Fed Rate Cuts Forecast

Goldman Sachs has revised its forecast, anticipating the Federal Reserve will cut interest rates three times in 2025 due to weaker-than-expected impacts of tariffs on inflation. Led by chief economist Jan Hatzius, the Goldman Sachs research team projects rate cuts of 25 basis points, scheduled for September, October, and December. The revised forecast highlights softening labor market indicators.

Market Impact

Market impacts of these rate cuts could be substantial, notably for cryptocurrency markets. Historically, such monetary actions improve risk sentiment, leading to increased demand for assets like Bitcoin and Ethereum. The broader financial implications include anticipated shifts in asset allocation. Lower interest rates generally foster increased investment in riskier assets as investors seek higher returns. This has been seen in previous easing cycles.

"We now see three 25 basis-point cuts in September, October, and December... The main reason... is because they believe the Trump tariff strategy may not have a large, lasting impact on consumer price inflation... But the very early evidence suggests that the tariff effects look a bit smaller than we expected, other disinflationary forces have been stronger..." — Jan Hatzius, Chief Economist, Goldman Sachs

Broader Implications

The financial community may perceive these cuts as a response to macroeconomic conditions. They could stimulate investment and lending activity. Similar policy moves in past cycles led to increased crypto valuations, highlighting potential benefits. Insights from past cycles suggest that rate cuts often lead to improved liquidity conditions. Cryptocurrency markets, including Bitcoin and Ethereum, might experience price increases and heightened trading activity as investors react to market conditions.

Source: CryptoSlate

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Winkelmann

Stocks

Forex

Political

Economic

Political pressure, changing personnel and a complex mix of macroeconomic data in recent weeks have renewed the focus on the Federal Reserve and its policy direction. Compared to the bond markets, equity markets seem to be taking these developments in stride.The past few weeks have been captivating for Federal Reserve watchers. The resignation of board governor Adriana Kugler and temporary replacement by President Trump appointee Stephen Miran has coincided with the emergence of an expanding list of possible successors to chair Jay Powell and the release of a swath of policy-influencing macroeconomic data.

Taken together, this has renewed the focus on the Fed and future policy direction, which the market still currently expects to head lower even though the path is being made more complex by a mix of positive and negative employment and inflation prints.The hot Producer Price Index data—showing wholesale inflation rising 0.9% from a month earlier and 3.3% from a year ago—provided a fresh example last week, overshadowing the earlier broadly benign Consumer Price Index data and unsettling the U.S. equity and bond markets.

After equities had rallied to fresh highs earlier in the week on the CPI data (core CPI year-over-year was in line with expectations at 3.1% in July) and expectations the Fed would cut rates in September, the PPI print halted the march higher and in parallel pushed up Treasury yields, especially at the short end.As a result of last week’s data—including broadly resilient July retail sales reported on Friday—the market is still pricing in a rate cut next month. It’s just no longer fully pricing in a quarter-point cut, as it did at the start of the week.

Such a reaction to the PPI data broadly reflects two views: equity investors see the threat inflation poses to their bet of a soft landing and a more accommodative policy environment, while bond investors see a longer period of above-target inflation, higher economic growth prospects and continued deficit concerns.

Small Cap Signal

A more accurate reading of what the equity and bond markets are signalling is complicated. Combined with multiple exogenous factors influencing the shape of the yield curve, bond investors are clearly preoccupied by the impact of sticky inflation and any weakening in the labor market on monetary easing.Yet many equity investors are instead more focused on the Fed and continued easing, which would accelerate business and consumer investment, and, through lower financing costs, support smaller companies, especially those in more interest-rate sensitive cyclical industries.

The move higher in the Russell 2000 small cap index in recent weeks—extending a stronger performance overall and especially lower-quality parts of the market over the past few months—gives some support to this, indicating investors are beginning to price in a more accommodative monetary environment as the U.S. economy potentially begins to accelerate out of the current slowdown.When that may happen is uncertain, but we believe that muted economic growth in the next few quarters is unlikely to approach recessionary levels, and that the economy will continue to demonstrate resilience, particularly to the impact of tariffs and the extent they are being absorbed by companies and consumers.

Further fortifying this resilience and boosting the prospects for growth over the medium term is the administration’s deregulation drive and the passing of the U.S. tax and spending bill. As well as helping to bolster disposable income and sustaining consumer demand, the bill will more significantly benefit small and medium-sized companies by introducing several pro-growth measures aimed at stimulating innovation, investment and domestic production.

Risks to Easing Remain

Looking ahead, the focus now turns to three more major data releases—July Personal Consumption Expenditures, August CPI and August non-farm payrolls—in the coming days as well as the Jackson Hole symposium.

Much of the focus will likely fall on the August jobs report, but the relative strength or weakness of the overall economy will also be a driving factor in the Fed’s messaging coming into and out of Jackson Hole and the September meeting.In our view, there is likely little to disrupt the near-term path to lower rates, but any evidence showing that services prices are reversing their downward trend could jeopardize rate cuts slated for 2026 and keep the Fed above the 3.5% mark moving into middle of next year.

In addition, evidence of continued political pressure on the Fed could also push yields higher and disrupt efforts to effect more accommodative policy.History tells us that August and September can bring market volatility, and to some extent we are already seeing this. However, looking through these periods, our medium-term outlook remains constructive.What’s more, we believe the combination of lower rates to come, deregulation and the pro-growth measures of the tax and spending bill continue to create an attractive case for small and mid-caps, which is why the Asset Allocation Committee is overweight the sector.

Source: Neuberger Berman

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Warren Takunda

Economic

GBP/CAD leapt to a high of 1.8737 late last week following an uninterrupted run of 11 straight daily gains; the last time it achieved this was during the impressive run that started in late February and ended in early March.

That impulse took GBP/CAD to new multi-year highs, from where it carved out a broad sideways trending range. In this last week we saw the pair break above the upper end of that range, raising the odds that a new impulse higher was starting.

But there are a couple of observations to consider:

1) previous peeks above here have all ultimately failed and2) the recent rally might merely be an upmove within the 2025 range that has simply overshot.

If this were to be the case, then gravity would pull GBPCAD lower in the coming days.

Also, the Relative Strength Index (RSI) rose to hit 70 last week, which triggered an overbought scenario whereby a correction or consolidation was required.

A retreat to the nine-day exponential moving average (EMA), currently at 1.8597, is possible in the coming days as overbought conditions unwind.

However, if the pair can stay above the nine-day EMA the setup is constructive and we would look for the rally to resume as weakness is bought into.

Pound-to-Canadian Dollar Week Ahead: Retracing_1

Much will depend on the U.S. Dollar from here, as GBP/USD and GBP/CAD are closely aligned.

Should the Dollar falter in the wake of Jerome Powell's address to the Jackson Hole Economic Symposium, then further GBP/CAD upside towards the end of the week is likely.

Federal Reserve Chair Jerome Powell speaks at the conference on Friday, and the assumption is that he will verify market bets for a 25 basis point interest rate hike on account of cooling U.S. labour markets.

However, he will reject hopes for a 50bp move on account of still-high inflation, which could shore up the Dollar and GBP/CAD.

Jackson Hole has a history of being significant for markets as the Fed Chair has often used the address to signal shifts in policy.

"At last year’s Jackson Hole Economic Symposium, Fed Chair Powell sent a clear signal that the time had arrived to start lowering rates which was followed by a larger 50bps rate cut at the September FOMC meeting," says a currency note from MUFG Bank, out Monday.

Last year Powell said "the time has come for policy to adjust. The direction of travel is clear" with inflation on a "sustainable path" toward their target.

"At this month’s Jackson Hole Economic Symposium market participants will be listening closely to see if Chair Powell validates pricing for rate cuts to resume next month. The risk is that Chair Powell refrains from providing a clear signal over the timing of the next rate cut giving the Fed more time to continue assessing incoming data before the September FOMC meeting. It could help to dampen downward pressure on the US dollar in the near-term," says MUFG.

A USD rebound would weigh on GBP/CAD.

However, analysts at ING Bank think the address will lean dovish on the Dollar.

"Benign conditions look set to continue, given a quiet week for data and focus on Friday's Jackson Hole symposium – presumed dovish. Expect the dollar to stay generally offered," says Chris Turner, head of FX analysis at ING Bank N.V.

Here, USD weakness would help GBP/CAD higher again.

Source: Poundsterlinglive

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Golden Gleam

Technical Analysis

Gold price edged higher in early Monday, as uncertainty grows ahead of today’s meeting between President Trump and leaders of Ukraine and some European countries.

The US President sent a strong signal that the US wants to end war in Ukraine, following Friday’s Trump-Putin summit in Alaska, which many analysts described as the most significant political event in 21st century.

Although Trump’s rhetoric is still rough in some cases and includes threats to both sides, it looks that the story may accelerate towards the peace agreement as Trump sees restoring of ties with Russia and new business deals as better solution than to continue to confront them.

The Europe and Ukraine’s space to maneuver has narrowed further, mainly due to their high dependence of US help, which could be reduced or stopped in case they reject Trump’s suggestions.

However, we may see a clearer picture probably by Tuesday morning, when results of top-level meeting (due later today) come out.

Gold price would come under pressure if the outcome of today’s meeting signals a peace deal on horizon, while prevailing hawkish tones would likely boost safe-haven demand and lift metal’s price.

Technical picture on daily chart remains bullishly aligned as near-term price action continues to float above the top of daily Ichimoku cloud ($3337), also supported by ascending trendline lower boundary ($3327).

Momentum indicator is in positive territory and adds to bullish bias, although near term action needs to see lift above $3365/74 zone (daily Tenkan-sen / Friday’s peak) to strengthen bulls for attack at $3391 (upper triangle boundary) and unmask upper breakpoint at $3400 zone (psychological / Aug 8 high).

Conversely, penetration and closing within daily cloud (below triangle support line) would weaken near term structure and bring in focus key supports at $3300 (psychological) and $3286 (daily cloud top).

Interesting situation could be also seen on monthly chart, where three consecutive long-legged monthly Dojis and four strong upside rejections generate signals of high uncertainty, but also warn that larger bulls might be running out of steam.

Markets will be also focusing on Jackson Hole symposium which starts later this week and look for more signals about Fed’s interest rate path.

Res: 3353; 3366; 3375; 3391.Sup: 3337; 3327; 3321; 3307.

Source: ACTIONFOREX

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Warren Takunda

Economic

Stocks

London stocks had dipped into the red by midday on Monday in quiet trade, as investors eyed a meeting between EU leaders, Ukrainian president Zelensky and US president Trump on the Ukraine conflict.

The FTSE 100 was down 0.1% at 9,130.89.

The meeting, which is due to take place in Washington, comes after Friday’s meeting between Trump and Zelensky failed to yield a ceasefire.

Joshua Mahony, chief market analyst at Scope Markets, said: "Donald Trump’s meeting with Putin somewhat predictably ended with a lack of any agreement that ends the war with Ukraine, although he does enter today’s Zelensky meeting with a plan that is unlikely to go down well. From the Russian perspective, their desire to lock in their military gains as a newly expanded part of Russia will undoubtedly prove a huge stumbling block, while talk of land swaps are equally as unpalatable. Zelensky has already stated that the Ukrainian constitution makes giving up land to Russia ‘impossible’.

"However, another part of the solution lays in NATO membership, with Trump posting that he can end the war almost immediately if Ukraine pledges to give up aspirations on joining the group. While the US and Europe could still provide security guarantees as part of the deal, there will likely be a hesitancy given how the historical agreement to give up on their nuclear programme went. While we continue to see the 50% tariffs on India in part due to their purchases of Russian oil, the fact that China has remained untouched for doing the same means we are unlikely to see an escalation that could drive a spike in oil prices."

Later in the week, attention will turn to the Jackson Hole Symposium in Wyoming.

Patrick Munnelly at TickMill Group said it’s "expected to be a pivotal moment for markets as Federal Reserve Chair Powell outlines the Fed's near-term policy direction".

"However, as is often the case, differing opinions from figures like Trump and Bessent may add to the noise, especially with ongoing discussions around Fed appointments, potential legal challenges, and changes in the labour market report," he added.

On home shores, a survey out earlier showed that consumer sentiment picked up in August after the Bank of England cut interest rates.

The S&P Global consumer sentiment index increased to 47.0 from 45.1 in July. This marked the highest reading since last October’s Budget announcement, with all the subcomponents of the headline index registering a rise.

A reading above 50.0 indicates an improvement, while a reading below signals a deterioration in sentiment.

Maryam Baluch, economist at S&P Global Market Intelligence, said: "August CSI data comes hot on the heels of the recent rate cut decision made by the Bank of England earlier in the month. Data collection began just a day after the central bank's announcement, providing a timely snapshot of sentiment in the wake of monetary policy easing.

"Encouragingly, the data reveals a slight revival in household confidence, which is a telling sign that the easing of monetary policy has been received positively by households across the country. The headline index signalled the strongest reading since last October, greatly bolstered by robust perceptions of labour market conditions, which were the second strongest in the survey’s history.

"Households reported less of a squeeze on their finances, and the year ahead outlook was the least pessimistic in nine months. This positive shift indicates less concern among consumers regarding their financial situation. Moreover, households accumulated debt to the least marked degree in three months, despite reporting a greater availability of credit.

"Despite the recent uplift in consumer sentiment, particularly regarding perceptions of the labour market, this positive shift occurs against a backdrop of subdued UK economic performance. Lower borrowing costs could provide a further boost to consumer sentiment. Indeed, if the uptick in sentiment can be sustained, it could translate into better fortunes for the wider UK economy."

Earlier, figures from Rightmove showed that house prices fell in August, but sales hit a five-year high.

Corporate news was scarce as the summer lull set in, but Babcock surged to the top of the FSTE 100 as RBC Capital Markets initiated coverage of the stock with an ‘outperform’ rating and 1,200p price target.

Dr Martens was the standout gainer on the FTSE 250 on the back of a rating upgrade by Peel Hunt.

Land Securities edged lower higher after saying it exchanged contracts for the sale of its Queen Anne's Mansions office block in London to Arora Group for £245m.

Great Portland Estates fell after it secured three new fully managed leasing deals, totalling 11,720 square feet of "premium, refurbished office space".

Close Brothers slumped after RBC Capital downgraded the stock to ‘sector perform’ from ‘outperform’.

Food producer Cranswick lost ground following fresh animal cruelty allegations.