Market Report: Slow start to week as markets take check of recent euphoria
Derren Nathan, head of equity research, Hargreaves Lansdown: “The FTSE 100 has dipped a touch this Monday morning, after a small retreat last week. Still, the index is up over 11.5% so far this year and up around 20% from its post-liberation day lows. However, UK stocks haven’t quite kept pace with US stock markets, which ended last week on yet another record high on hopes for a further relaxation in monetary policy over the remainder of 2025. The combination of structural value drivers from the Artificial Intelligence boom and higher than expected resilience within the global economy is helping investor confidence to keep its head above water.
Wall Street is expected to edge down a little at the open. Markets are taking stock of guidance issued by the Trump administration over the weekend that revealed a $100,000 annual charge per employee of US workers holding an H-1B visa for skilled workers. It’s expected to apply to new applicants only, but it’s sparked some confusion amongst workers and enterprises alike.
While the H-1B applies to less than 1% of the American workforce, it’s a segment that punches above its weight when it comes to driving innovation. Banking titan JP Morgan asked holders currently outside of the US to rush back by the end of the weekend, with similar requests issued by the tech giants Amazon, Microsoft and Alphabet. So far however, tech investors are taking the news in their stride, with NASDAQ futures trading down by around only 0.1%.
There’s little in the way of scheduled corporate news to drive markets this week. On the macro front, Tuesday’s ‘Global PMI Day’ will give a steer on industrial health in the US, UK and the Eurozone. The largest uplift is expected in the German Index, which is forecast to rise from 40.8 to 50, reflecting the US-EU trade deal reached at the end of July. The UK Index is expected to rise from 47 to 49, with US PMI anticipated to fall from 53 to 52.
There are plenty of other data points this week that markets hope won’t derail the argument for further US rate cuts this year. It’s important to note that while the mood music is playing a doveish tune, there’s a wide spread of opinions amongst the members of the Federal Open Market Committee. Thursday will give a flavour of economic growth with GDP and Personal and initial jobless claims on the menu. Friday will see the release of Personal Consumption Expenditures (PCE) with core PCE, the Fed’s preferred measure of inflation, expected to have accelerated in August from 2.8% to 3.1% on an annualised basis.
Brent Crude prices have reversed some of last week’s losses and are sitting at around $67.2 per barrel. There’s been further military action by Russia in Ukraine, and incursions by the Russian air force into Estonia have prompted an emergency meeting by the UN Security Council. The likelihood of long and deep restrictions on Russian oil exports is increasing. However, there are still concerns of oversupply in the market with Iraq the latest OPEC+ nation to ramp up its exports. Traders will be paying close attention to this week’s US crude inventories after falling sharply last week due to strong US exports.”