- FTSE 100 expected to open flat after US no-show in Pakistan
- Meg O’Neill’s first results as BP CEO due on Wednesday
- Bank of England meets on Thursday, rates expected to hold at 3.75%
- Brent crude rises to around $107 per barrel
- S&P 500 futures little changed; this week’s Fed meeting in focus
- US core inflation (PCE) on Thursday (Consensus 3.2%)
- NASDAQ futures higher ahead of a huge week for tech earnings
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100 is set to open flat this Monday morning, despite the lack of dialogue at this weekend’s proposed negotiations between Iran and the US, after President Trump instructed his delegates to stay at home. It may be that hopes of a diplomatic breakthrough were pretty faint to start with, and markets are now in wait-and-see territory ahead of a heavy week of earnings and economic touchpoints.
BP’s first-quarter results on Wednesday will be new CEO Meg O’Neill’s first opportunity to set expectations, and come hot on the heels of a tense AGM where shareholders blocked a resolution to change its climate reporting. However, financial performance is likely to be her number-one priority. Despite an exceptional oil trading result (no surprise given the recent volatility), net debt, a key focus for the new boss, is expected to have moved in the wrong direction. This may prove to be largely down to timing, and investors will be keen to hear whether surging oil prices could herald a quicker-than-expected return for share buybacks.
The Bank of England is one of several central banks setting rates this week. Given the uncertainty generated by the Middle East conflict, no change looks to be the order of the day, and the BoE is no exception, with markets expecting a hold at 3.75%. UK economic activity has been resilient so far, but much of this could be due to demand being pulled forward, and a slowdown is widely anticipated. Investors will be looking into the tea leaves of the meeting minutes for clues as to whether supporting growth or stemming inflation will be the priority later in the year.
Lack of progress in Pakistan has seen Brent crude oil prices climb further to around $107 after adding 17% last week. President Trump participated in a call with Keir Starmer just hours after shots were fired at the White House Correspondents’ Dinner. The Prime Minister stressed that Britain does not support the US blockade and that naval efforts are focused on opening the Strait of Hormuz. With little in the way of a firm timeline for the resumption of unrestricted shipping, that has not helped to stabilise the
S&P 500 futures are also trading flat this morning following Friday’s record close. A hold in Fed rates at 3.5%–3.75% is all but certain on Thursday, in what may be Jay Powell’s last meeting in the chair. The end of the criminal investigation by the Department of Justice into his renovation of the Fed HQ has seen Senator Thom Tillis, formerly seen as a stumbling block to Kevin Warsh’s appointment, come out in a supportive tone. The Senate Banking Committee is now expected to vote on Mr Warsh’s nomination on Wednesday.
US PCE (Personal Consumption Expenditure) prices this week will provide him with food for thought for potential policy decisions later in the year. The headline year-on-year number, which includes energy costs, is forecast to have jumped from 2.8% in February to 3.5%. Core PCE, the Fed’s preferred measure of inflation, is also expected to have risen, albeit by a smaller margin of 0.2 percentage points to 3.2%. Anything materially higher than that could see hopes for rate cuts, currently tentatively pencilled in for September 2027, pushed out even further. However, it’s developments in the Gulf that will remain the bigger influence for now, with any progress likely to see bets firm again on an earlier resumption of the easing cycle.
NASDAQ futures are trading positively ahead of a week where tech names Alphabet, Amazon, Meta and Microsoft are all set to report. Between them, these names represent around one quarter of the S&P 500’s value and over 40% of the NASDAQ 100. Most of these companies have been jostling to write ever-bigger cheques in order to secure bragging rights as AI leaders. Further increases in investment could be on the cards, but investor support for these initiatives will depend on clear evidence of strong returns.”
