- FTSE 100 starts the week lower as attention turns to Federal Reserve’s next move
- US futures holding steady following gains last week, ahead of key tech earnings this week
- Barbie makes £120m in its opening weekend in a lifeline to struggling cinemas
- Vodafone shows signs of green shoots, shares rise 3%
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown
“The FTSE 100 has shed its coat of optimism, opening down 22 points. It’s likely to be a choppy week on the markets as investors gear up to digest a slew of results from some of the UK’s biggest companies, including banks and housebuilders, who should be able to highlight the lay of the land in an economic sense – especially around consumer resilience. The recent market moves are stemming from the pivot towards the US, where the Federal Reserve is in position to set the stage for another interest rate increase, after it resumes its monetary tightening campaign this week. On Wednesday, the Federal Open Market Committee is widely expected to raise its benchmark rate.
The debate around how much the economy needs to be zapped with higher rates to quash inflation properly is still raging on. While the expectation is that interest rates will need to go higher still, that’s led to some stagnation in the US markets as we kick off the week, following strong gains last week. Investors are holding their breath ahead of key tech earnings, which among other things, will paint a picture for how advertising demand is shaping up, as well as how the league tables are looking for the AI race. Market volatility, especially from the Nasdaq composite, is likely to be coming down the line.
Barbie has taken over our lives, with the brash branding and press tours seemingly inescapable. But this kooky film has made around £120m in its opening weekend, and fellow blockbuster Oppenheimer has made around £72m. Cinema giant Vue in the UK has reported the best weekend in four years, and this is a sentiment likely to be repeated by other chains and countries. Cinema companies are grappling with enormous competition from streamers and in many cases, are also lugging huge debt piles, making it even more important to have customers filing through their doors. The success of these films will have been made easier by the start of the summer holidays, but the scope of the money spent on tickets shows it is possible for cinemas to have a renaissance, despite the cost-of-living crisis. The main focus now will be on the pipeline of future hits, with big hitters becoming fewer and further between.”
Vodafone, Matt Britzman – equity analyst at Hargreaves Lansdown:
“The transformation at Vodafone is in its infancy, and there’s a long way to go – but tentative signs of green shoots are emerging. Europe squeezed out overall growth in service revenue, as declines eased in Germany and Italy. Germany remains a key battleground and focal point of the transformation, after more than €20bn of investment it’s vital that trends continue to improve from here and the region returns to growth sooner rather than later. Price hikes are to thank for the relative improvement over the quarter in Germany. That’s great for boosting short-term performance but there are more fundamental challenges that need to be dealt with – IT systems have been slow to adapt to new regulations and poor network performance means customer satisfaction levels have been under pressure in recent times.
The UK and operations in Africa continue to be beacons of light, with growth not only down to higher prices but a growing customer base too. The deal with Three UK to create one of the largest players in the market is still in progress, expected to be completed by the end of 2024. Should the deal make it past the regulator, efficiencies and greater scale are likely to mean a better experience for consumers, and crucially, a more competitive price environment.”
