FTSE 100 stalls, markets look ahead to earnings season and…
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “The FTSE 100 has failed to recoup losses from Friday, when weak retail figures and less-than-ideal housing data soured the mood music. The sense of optimism could stem from the fact the week holds a lot of big events, including the European Central Bank’s interest rate decision on Thursday. There’s an expectation that rates will be held at 4.5%, and even more important will be the commentary around the decision, as investors look for clues of cuts coming in summer. At the same time, we have CPI numbers in the US to look forward to, following a much hotter read on employment numbers last week than hoped for. Together with the starting gun for earnings season on Friday with financial bellwether JPMorgan Chase results, it’s all eyes forward this week.
JP Morgan’s CEO, Jamie Dimon, is also expected to publish his annual letter to shareholders. This is something that is usually read closely by analysts and investors as it can hold clues to the economy’s flight path from here. One banking giant that’s certainly had a bumpy ride lately is Citigroup, which is due to report a drop in first quarter profits, as investors look for evidence that its large-scale reorganisation efforts are coming to fruition. More significant will be the outlook statement, including growth targets, as well as how much further headcount reductions will go.
Tesla’s share price could be fighting for ground this week after rumours swirl that it’s cancelling plans to produce a cheaper vehicle. Competition from the likes of BYD in China is mounting, and investors were banking on Tesla quashing this with more affordable models. The news, first reported by Reuters, has the potential to inject jitters into the group’s valuation, which has already been hampered more recently. Elon Musk moved quickly to deny the news, but without a more formal rebuttal, there could still be some nervousness.
Gold shot past $2,340 an ounce on Monday, a new record high. Investors are continuing to untangle the implications of a stronger US jobs market, and the potential for higher interest rates. The needle is likely to move this week, depending on the outcome of the Federal Reserve’s March minutes and CPI data. Some commentators believe that sub-$2000 pricing for the shiny stuff could be a thing of the past, but as with all commodities, there will be ups and downs. There’s an element of people chasing the high which is contributing to the climbs seen in recent days, rather than the rally being solely based on fundamental factors.
Brent crude prices have softened to just under $90 a barrel, after Israel withdrew more troops from Southern Gaza. The price remains elevated overall though and together with tighter supply globally, there isn’t an immediate catalyst for the price to loosen.”
