(Alliance News) - Stock prices in London took a hit at the open on Monday, with eyes on the US Federal Reserve and the trajectory of interest rates.

The euro also took a big hit on Monday, following the EU election, which has seen the rise of right wing parties and a French snap election.

The FTSE 100 index opened down 26.01 points, 0.3%, at 8,219.36. The FTSE 250 was down 87.84 points, 0.4%, at 20,467.53, and the AIM All-Share was down 1.52 points, 0.2%, at 792.01.

The Cboe UK 100 was down 0.4% at 819.26, the Cboe UK 250 was down 0.4% at 17,906.97, and the Cboe Small Companies was up slightly at 16,845.99.

In European equities on Monday, the CAC 40 in Paris was down 1.9%, while the DAX 40 in Frankfurt was down 0.6%.

The US Federal Reserve will announce its latest interest rate decision on Wednesday this week. At the central bank's fourth meeting of 2024, the Fed is expected to leave interest rates unchanged.

The decision will be announced after the US May consumer price inflation data is out.

According to FXStreet CPI is expected to stick at 3.4% in May, the same level recorded in April. It remains above the Fed's 2% target.

"Therefore the Fed and its Chair Jerome Powell will probably ask for more patience and their quarterly dot plot will more likely than not show lesser rate cuts this year than they predicted in March," said Ipek Ozkardeskaya at Swissquote Bank.

Last week saw the Bank of Canada and European Central Bank break the trend of keeping interest rates unchanged. Both central banks cut interest rates by 25 basis points, as expected by markets.

Yet, the ECB still has "a long way to go" to tame inflation, its president Christine Lagarde said Friday.

In an op-ed published Friday evening in several European newspapers, Lagarde said that inflation had "slowed significantly" and was expected to fall to the target level of 2% by next year.

"But there is still a long way to go until inflation is squeezed out of the economy. It will not be an entirely smooth ride," she continued.

The European Union has been hit with further political instability over the weekend, following the EU elections.

Far-right parties made striking gains in EU elections on Sunday, while the ultimate losers were French President Emmanuel Macron – and the Greens.

In France, Macron's liberal party received a drubbing by France's National Rally led by Marine Le Pen. The French president responded by swiftly dissolving France's national parliament and calling for snap elections.

On the back of this, the euro took a hit. The euro stood at USD1.0757 early on Monday in London, down against USD1.0812 at the equities close on Friday..

The pound was quoted at USD1.2720 early on Monday in London, lower compared to USD1.2724 at the equities close on Friday. Against the yen, the dollar was trading at JPY157.01, higher compared to JPY156.82.

In the FTSE 100, M&G was amongst six stocks in the green early Monday. It edged up just 0.5%.

JPMorgan raised the asset manager's broker rating to 'overweight' from 'neutral'.

In the FTSE 250, ME Group International lost 3.6%.

The Epsom, England-based vending machine operator that "positive trading momentum" continued throughout the six months ended April 30, compared to a year ago.

Revenue in the interim period was up 4.6% annually and pretax profit up 10%.

"The group remained focused on the continued growth of its core photobooth and laundry operations," it noted.

On London's AIM, Clontarf Energy shot up 55%.

In 2023, the oil, gas and minerals explorer's pretax loss narrowed to GBP870,061 from GBP4.8 million a year earlier.

On the other hand, Arecor Therapeutics plummeted 31%.

The Essex, England-based biopharmaceutical firm said its working capital requirements have accelerated primarily as a result of the timing of potential pipeline revenue and an increase in costs.

Arecor now expects funding to be required in the third quarter of 2024.

In Asia on Monday, the Nikkei 225 index in Tokyo was up 0.9%.

Financial markets in Shanghai, Hong Kong and Australia were closed on Monday for public holidays.

In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average and Nasdaq Composite down 0.2%, meanwhile the S&P 500 lost 0.1%.

Brent oil was quoted at USD79.84 a barrel early in London on Monday, up slightly from USD79.81 late Friday. Gold was quoted at USD2,296.70 an ounce, down against USD2,312.90.

By Sophie Rose, Alliance News senior reporter

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