Early market roundup: Europe mixed ahead of Wednesday's US CPI data

The FTSE 100 edged lower in quiet trade at the start of the week, on little US-Iran peace progress, before focus turns to a US inflation reading.

The FTSE 100 index opened down 10.01 points, 0.1%, at 10,891.08. The FTSE 250 eased 9.95 points, at 24,844.91, easing from a record close achieved on Friday. Its intraday record of 25,134.76 points was achieved in June. The AIM all-share was up 3.21 points, 0.4%, at 799.10.

The Cboe UK 100 was down 0.2% at 1,081.59, the Cboe UK 250 slightly lower at 21,673.18, and the Cboe small companies lost 0.3% at 18,949.79.

In European equities on Monday, the CAC 40 in Paris was slightly lower, while the DAX 40 in Frankfurt was up 0.1%.

Sterling fell to USD1.3494 from USD1.3498 at the time of the London equities close on Friday. The euro fell marginally to USD1.1558 from USD1.1560. Against the single currency, the pound declined to EUR1.1671 from EUR1.1677. The dollar climbed to JPY158.43 against the yen from JPY157.68.

"Friday's weak payrolls report delivered the first dovish signal in our five-test countdown to the September FOMC. Wednesday’s CPI is the next test," analysts at ING commented.

"At the start of August, our call for no Federal Reserve hikes this year was set to face five major tests before the 16 September FOMC: two jobs reports, two CPI reports and Jackson Hole. Our feeling was that if those events failed to trigger a dovish shift in market expectations, pricing a September hike above 50% could itself have materially increased the risk of a hike, if only to avoid another bond sell-off on meeting day. The first test arrived on Friday and came through clearly dovish and dollar-negative."

The US labour market surprisingly shed jobs last month, in a nonfarm payrolls reading that sent the dollar into reverse on Friday.

The Bureau of Labor Statistics said nonfarm payrolls shrunk by 23,000 in July, after rising 20,000 in June. Payrolls had been expected to rise by 80,000 last month, however, according to consensus cited by FXStreet.

What's more, the reading for June was downwardly revised from 57,000, and the May data was lowered to 63,000 from 129,000.

Wednesday's consumer price index data is expected to show the annual rate of inflation cooled to 3.4% last month from 3.5% in June.

The yield on the US 10-year Treasury eased to 4.64% from 4.65%, where it stood at the London equities close on Friday. The yield on the US 30-year Treasury stayed at 5.20%.

In the US on Friday, the Dow Jones Industrial Average ended up 0.3%, the S&P 500 rose 0.6% and the Nasdaq Composite surged 1.3%.

A barrel of Brent rose to USD83.54 early Monday, from USD83.40 late Friday afternoon. Gold rose to USD4,353.72 an ounce from USD4,349.35.

US President Donald Trump is downplaying the prospect of reopening of the Strait of Hormuz as a diplomatic breakthrough with Iran fails to materialise, Axios reported on Sunday.

"We are low-keying it," Axios quoted him as saying in a phone call. The US will not devote itself fully to negotiations with Iran, Trump reportedly said.

"We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money," he told the news outlet, arguing that the US naval blockade of Iranian ports has worsened the situation.

"It will work out. It always works out. It's like a chess game," Trump said of the back-and-forth with Iran, according to Axios, which quoted US officials as saying Trump was focusing on de-escalation.

Iran's Revolutionary Guards insisted Sunday that they would not reopen the Strait of Hormuz until the US complied with a list of demands, including paying compensation for war damage.

Analysts at Deutsche Bank commented: "The situation in Iran remains finely balanced with Iran’s latest political and security moves suggesting that Tehran is trying to balance a tougher domestic posture with a continued search for a diplomatic off-ramp."

In Tokyo on Monday, the Nikkei 225 surged 2.1%. In China, the Shanghai Composite climbed 0.7%, while the Hang Seng Index was up 1.0%. The S&P/ASX 200 in Sydney fell 0.3%.

China's consumer and factory prices grew slower than expected last month, official data showed Sunday, as the world's second-largest economy confronts persistent deflationary pressure.

The consumer price index, a key gauge of inflation, expanded 0.5% year-on-year, according to the National Bureau of Statistics. That was lower than the 0.8% forecast by a Bloomberg survey and the slowest rise since January. Consumer prices rose 1.0% on-year in June.

In London, Plus500 added 5.4%. The trading platform provider upped its payout and announced a USD100 million buyback.

Pretax profit in the first half of 2026 rose 0.8% to USD183.2 million from USD181.8 million a year prior, with revenue up 12% to USD462.9 million from USD415.1 million.

IG Group topped the FTSE 100 with a 2.4% stride in a positive read across.

Vistry was 8.5% lower, the worst FTSE 250 performer. The Financial Times reported credit insurer Allianz Trade is cutting the cover it offers to suppliers of the housebuilder.

Citing people familiar with the decision, the FT said the move could result in cover being reduced by up to 70%. The final level of cover provided may hinge on Vistry's financial performance in times to come, the FT reported.

The likes of Allianz Trade insure suppliers in case customers fail to pay for services or products.

Elsewhere, Pharos Energy fell 4.8% as Serica decided against lifting its takeover offer for the firm, which has assets in Vietnam and Egypt. Offshore oil and gas producer in UK continental shelf Serica said it "retains a highly disciplined approach to M&A".

Its £145.7 million stands below a Ratio Petroleum bid that values Pharos Energy at £146.4 million.

Serica rose 1.6%.

Strip Tinning shares jumped 91%. The supplier of connection systems to the automotive sector has been awarded a £3 million grant in the UK.

"The successful award of this grant combined with the company's own funding provides the resources needed to meet expected demand from existing contracts in 2027 and beyond together with a platform for further growth. For the grant funding to be committed, the project start up requirements need to have been met and the grant offer letter received," the firm said.

The grant forms part of the UK government's £4 billion DRIVE35 programme.

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