- FTSE 100 opens in the red.
- US jobs data in focus.
- Bellway warns of dent to trading caused by general election campaigning.
- Anti-trust probes into AI get one step closer.
- Oil set for three-weekly decline despite recent gains.
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown:
“The FTSE 100 has failed to benefit from a risk-on attitude in global equities, helped by the ECB’s decision to loosen monetary policy. While the losses seen at the open seem to be stemming more from a lack of good news, than the introduction of anything problematic. The relative lack of company news as results dwindle for summer, also makes it more difficult for the index to find its footing.
One data set the market has its eyes firmly trained on is US jobs data. The US is expected to report the economy added 185,000 jobs in May, which marks an increase from April. Unemployment is due to hold steady at two year highs. Ultimately, these numbers are due to show the US continues to have a strong labour market, even if conditions are cooling slightly. The Federal Reserve will of course take these figures into account, but barring anything wilding off-course, the figures are unlikely to shake policymakers off the course already charted. Optimism remains in the market that two cuts could be on the way this year.
Housebuilder Bellway has warned that general election campaigning could dent trading over the next few weeks. That’s a fly in the ointment the sector could do without, given falling volumes as potential customers wait for the economy to stabilise. Bellway’s trading statement does suggest conditions overall are starting to normalise, with large swings in mortgage rates looking like they may be in the rearview mirror. Demand for newbuilds has picked up since the first half of the year, which together with rising house prices will help to stem some of the margin losses. There’s still work to be done on the cost front, and some near-term political uncertainty needs to be navigated.
The US Justice Department and Federal Trade Commission have struck a deal, which opens the door to potential anti-trust probes into big tech. The wholly dominant roles that the likes of Microsoft, OpenAI and Nvidia fulfil in the world of AI has long been a discussion point. The regulatory landscape may be set to get tougher, but these firms have enormous resources to engage, and if necessary, fight, any battles. Changes to structures can’t be ruled out, but neither are they guaranteed. One concern relating to increased AI scrutiny is a lack of granular knowledge on the tech being policed, which could cause unhelpful policies being brought into force.
Broader optimism about US rate cuts have been brought into focus as we await non-farm payrolls, which has seen Brent crude hike back to over $79 a barrel. On a three-week view, the black stuff is still stuck in a slippery decline, spurred by a lack of positive movement from OPEC+ on production quotas.”
