12th Jan 2026 07:00
(Alliance News) - Stocks in London are set to open lower on Monday, as markets digest escalating pressure from Trump on the Federal Reserve.
IG says futures indicate the FTSE 100 to open down 12.5 points, or 0.1%, at 10,112.10 on Monday. The index of London large-caps closed 0.8% higher at 10,124.60 on Friday.
The finance ministers from the Group of Seven leading global democracies and others plan to discuss access to critical raw materials in Washington on Monday.
Thirty-four materials, such as lithium, cobalt, rare earths, copper and aluminium, are considered critical raw materials due to their particular importance to the economy.
They are essential for key technologies, but their supply often depends on a few countries like China and Venezuela, for example.
The talks come as US President Donald Trump has repeated his claim to Greenland, which has large deposits of rare earths. Several G7 members have expressed their opposition to this, stressing that Greenland's sovereignty is a matter for Greenland and Denmark, of which the island is a part.
Markets opened the week reacting to news on Sunday that Federal Reserve Chair Jerome Powell said the central bank has been served with grand jury subpoenas from the US Department of Justice, raising the threat of a criminal indictment.
Powell said the subpoenas relate to his testimony before the Senate Banking Committee in June and to ongoing renovations at the Federal Reserve headquarters.
Powell said: "Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation."
The probe would mark a further escalation in US President Donald Trump's long-running dispute with Powell, whom Trump nominated as Fed chair in 2017.
Trump has repeatedly threatened to remove Powell, criticising him for not cutting interest rates as aggressively as the president would prefer. In the second half of 2025, the Federal Reserve cut interest rates three times.
Michael Brown, senior research strategist at Pepperstone, said: "In a classic Trumpian distraction and bullying tactic, the President has upped the ante in his long-running feud with Fed Chair Powell, after the DoJ sent subpoenas to the Fed, ostensibly in relation to Powell's testimony on renovations to the Eccles Building last year.
"For markets, all this again speaks not only to the ridiculously volatile nature of the Trump Admin, but will also again shake confidence in the US' economic institutions, and by extension assets. Both the USD and USTs will now have to price a considerably higher risk premium, and hence are likely to face some headwinds in the short-term, and unimaginably brutal selling pressure if this matter were to progress to criminal charges, or a prosecution.
"Stocks will also come under pressure in such an instance, though dip buyers are likely to be out in force for the time being, given the still robust nature of both economic and earnings growth.
Sterling was quoted at USD1.3435 early Monday, higher than USD1.3407 at the London equities close on Friday.
The euro traded at USD1.1667 early Monday, higher than USD1.1631 late Friday. Against the yen, the dollar was quoted at JPY158.01 versus JPY158.06.
In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.5%, the S&P 500 up 0.7% and the Nasdaq Composite up 0.8%
Meanwhile, the US banking industry warned that Trump's proposal to cap credit card interest rates would reduce credit availability and harm consumers and businesses. Trump said on Friday that, effective January 20 – the first anniversary of his administration – he was calling for a 10% cap on credit card interest rates.
"We will no longer let the American Public be "ripped off' by Credit Card Companies that are charging Interest Rates of 20 to 30%," he said on Truth Social.
Five US banking associations responded that while they shared the goal of making credit more affordable, a 10% cap would be "devastating" for millions of families and small businesses and would push borrowers toward less regulated, more expensive alternatives.
In Asia on Monday, markets were higher. The Nikkei 225 in Tokyo climbed 1.6%. In China, the Shanghai Composite rose 1.1%, while the Hang Seng Index in Hong Kong gained 1.3%. The S&P/ASX 200 in Sydney closed up 0.5%.
Gold was quoted at USD4,574.40 an ounce early Monday, higher than USD4,504.56 on Friday. Brent oil traded at USD63.44 a barrel early Monday, slightly higher than USD63.42 late Friday.
Oil prices have been in focus over the past week following the toppling of Venezuelan leader Nicolas Maduro by US forces. Trump urged executives from major US oil companies to ramp up investment in Venezuela during a White House meeting on Friday.
Speaking afterwards, Trump said US companies would invest hundreds of billions of dollars in Venezuela, without providing details. Exxon Mobil Chief Executive Darren Woods said Venezuela's legal and economic framework currently made investment impossible.
Trump told executives he wanted US oil companies to commit at least USD100 billion to boost Venezuelan oil production. "If you don't want to go in, just let me know, because I've got 25 people that aren't here today that are willing to take your place," he said. Trump added that the US and Venezuela were "working well together" to rebuild the country's energy infrastructure.
Further attention has been drawn to oil markets amid rising tensions in Iran, another major producer, as unrest grows and anti-government demonstrations erupt. Trump has previously threatened to "hit" Iran "very hard" if security forces kill protesters.
Trump has previously threatened to "hit" Iran "very hard" if government forces kill protesters
In trade developments, European Commission President Ursula von der Leyen will sign the Mercosur trade agreement in Paraguay on January 17, Brussels said on Sunday. The EU gave final approval to the long-delayed trade pact on Friday, overriding opposition led by France.
Supporters argue the agreement, more than 25 years in the making, will boost exports and support Europe's economy.
However, the deal has met the strong opposition of European farmers, who fearing competition from cheaper South American beef and agricultural products.
In Monday's corporate calendar, a trading statement from Oxford Nanopore is expected.
In the economic calendar on Monday, Germany's current account data are due.
By Eva Castando, Alliance News reporter
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