Yen Strengthens as Central Banks Gather and Oil Holds High

The yen strengthened after the Bank of Japan signalled a more hawkish stance, while oil held above $110 and gold slipped to a three-week low. The FTSE 100 extended losses, with Shell plc, Marks and Spencer and J Sainsbury plc all falling. The S&P 500 and Nasdaq Composite edged higher, while Nvidia rose and Domino's Pizza declined sharply. The dollar steadied ahead of the Federal Reserve decision.

Equities

The FTSE 100 fell 0.6% to 10,321.09 by the close on Monday, extending its losing streak to six sessions, the longest run of declines in over a year. Weakness in energy and consumer stocks weighed on the index as hopes for progress in Iran–US talks faded and oil prices climbed. The mid-cap FTSE 250 ended the session little changed.

In London trading, Shell plc shares closed 1.7% lower after the company agreed to acquire ARC Resources in a $16.4 billion deal, a move that added pressure to the broader energy sector. Supermarket group J Sainsbury plc fell 3.3% following a double downgrade from Goldman Sachs, while Marks and Spencer dropped 4.7% after data pointed to a slowdown in UK clothing sales, with its own sales slipping slightly year-on-year. Aerospace and defence stocks edged up 0.2% late in the session, offering limited support.

Across the Atlantic, the S&P 500 closed 0.12% higher on Monday at a fresh record, while the Nasdaq Composite gained 0.20%. The Dow Jones Industrial Average slipped 0.13% by the close. Trading remained subdued as investors prepared for a busy week of earnings and central bank updates.

Corporate moves in the US were more pronounced. Verizon Communications rose 1.5% by the close after lifting its annual outlook on stronger subscriber growth. Domino's Pizza fell 8.8% after reporting first-quarter sales below expectations. Nvidia jumped 4.0%, adding to the previous session’s gains and pushing its market value back above $5 trillion.

Large technology names including Amazon, Alphabet, Meta Platforms, Apple and Microsoft are due to report results this week, keeping attention on earnings momentum.

Forex & Commodities

In currency markets early on Tuesday, the Japanese yen strengthened following the Bank of Japan decision to hold interest rates at 0.75% in a split vote. The yen traded firmer at 159.0 per dollar and strengthened to 186.3 against the euro, reaching its strongest level versus the single currency in two weeks. The US dollar edged higher, with the dollar index at 98.51 after snapping a short losing run, while the euro slipped to $1.171 and the British pound held steady at $1.353.

The policy decision from the Bank of Japan drew attention after three policymakers backed a rate increase, signalling a possible shift towards tighter policy in the coming months. Governor Kazuo Ueda is due to speak later today, with markets looking for guidance on the timing of any move. Japan’s finance minister also warned that authorities remain ready to act against excessive currency volatility.

Spot gold fell early on Tuesday to $4629 per ounce, its lowest level in three weeks. The decline came as the dollar strengthened slightly and oil prices remained elevated, adding to inflation concerns and reducing demand for non-yielding assets.

Oil prices moved higher early this morning, extending gains from the previous session. Brent crude rose to $110.6 per barrel, while US West Texas Intermediate traded at $98.17, both supported by ongoing disruption to shipping through the Strait of Hormuz.