FTSE 100 Futures Up as Labour Takes Power

Markets are steady as Keir Starmer becomes the UK's first Labour Prime Minister since Gordon Brown, with FTSE 100 futures rising 0.2% in Asia. Sterling remains strong, having gained on the dollar year-to-date, while the premium on gilts over German bonds holds steady at 160 basis points. Asian shares rise to record highs in Japan and Taiwan, with South Korea also seeing significant gains.

Equities

The FTSE 100 rose nearly 1% on Thursday, buoyed by gains in Smith & Nephew. The medical equipment company saw its shares jump 6.9% after Cevian Capital disclosed a 5% stake. Barclays shares gained 2.8% following the announcement of selling its German consumer finance business to BAWAG Group AG.

In the US, Nvidia added another 4.5%, contributing to its near 160% rise this year, leading the way for chipmakers. The S&P 500 and Nasdaq also hit record highs ahead of the July 4 celebrations. This was bolstered by expectations of a Federal Reserve interest rate cut in September.

In other European markets, the main MSCI global index hit a new record high. France's bond yields edged higher as the country's treasury smoothly sold 10.5 billion euros worth of bonds. Meanwhile, French stocks were influenced by polls indicating National Rally (RN) would not secure a majority in the upcoming parliamentary elections.

In Asia, indices also saw gains. Japan's Nikkei closed near its March peak, and Taiwan's main index reached a record high with Taiwan Semiconductor Manufacturing Co clearing T$1,000 for the first time.

Forex & Commodities

The US dollar was on the defensive near three-week lows ahead of payroll data, which is expected to show an increase of 190,000 jobs in June. The dollar index was down 0.15% at 105, its lowest point since mid-June. The pound remained firm, trading at $1.27705, following Labour's landslide victory in the UK general election, positioning it as the best-performing major currency against the dollar this year with a 1.2% gain.

Gold prices firmed, set for a second straight weekly gain, rising 0.3% to $2,363.25 per ounce, buoyed by weak US macroeconomic data suggesting a slowing economy. Traders anticipate a 73% chance of a Federal Reserve rate cut in September, with expectations that further weak payroll data could boost rate cut expectations and benefit gold prices.

Oil prices for Brent crude hit their highest level since April, holding above $87, with futures up 21 cents at $87.55 a barrel. This rise followed a larger-than-expected decline in US crude stocks, with the Energy Information Administration reporting a 12.2 million barrel draw. West Texas Intermediate crude futures were up 18 cents at $84.06. Analysts at UBS expect Brent to reach $90 a barrel this quarter, citing OPEC+ production cuts and projected declines in oil inventories.