- Asian markets fall, with UK, US and European futures in the red.
- Brent crude climbs above $111 per barrel.
- Unemployment and inflation numbers to set the scene for Downing Street showdown.
- Nvidia results set to close out big tech earnings season with blistering growth.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“After a weekend of drone strikes on energy infrastructure in the Middle East and Russia, Asia-Pacific equity markets have started the week in the red. Since the Iran conflict began, concerns about energy supplies have been especially acute in the Far East, which is heavily dependent on oil imports. But the prospect of a prolonged period of elevated oil prices is weighing more broadly this morning, with futures pointing to a weak open for European markets, the FTSE 100 and, later on, Wall Street.
Brent crude has climbed by around $2 this morning to above $111 a barrel, adding to last week’s steep gains. An escalation in drone attacks between Ukraine and Russia is a reminder that it’s not only Middle Eastern oil exports being disrupted by conflict. Russia remains the world’s second-largest exporter and, while restrictions on exports to countries such as India have been temporarily lifted, those waivers are set to expire soon.
The rhetoric around a Labour leadership challenge is shifting from if to when. But with challenger Andy Burnham needing to contest the Makerfield by-election to secure his right to run for the top job, clarity could still be weeks away. Prolonged uncertainty is unlikely to ease pressure on gilt yields, with the 10-year nudging 5.2%, levels not seen since 2007.
Consumer Price Inflation (CPI) and unemployment numbers this week will offer a read on the economic backdrop the next prime minister will inherit. So far, the economy has been relatively resilient to oil price shocks, but the full impact has yet to feed through to prices and confidence. Higher-than-expected inflation or a negative surprise from the jobs market could reignite stagflation fears. Meanwhile, April retail sales and the latest GfK consumer confidence numbers will provide a useful temperature check on the high street.
The key forecasts for this week paint a mixed picture: Tuesday – unemployment expected to land 4.9%, unchanged month on month; Wednesday – CPI inflation forecasted to fall from 3.3% to 3.0%, with core inflation slowing from 3.1% to 2.7%; Thursday – retail sales growth is expected to slip from 0.7% growth to a 0.4% decline, Friday – GfK consumer confidence expected to remain close to last month’s one-year low of minus 25.
On Wednesday, NVIDIA is set to bring the first-quarter big tech earnings season to a close, with AI demand so far showing little sign of being knocked off course by geopolitical turmoil.
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Nvidia heads into results with expectations already running hot. Analyst consensus has moved towards the top end of guidance ($79.6bn), but as is often the case with Nvidia, the market is likely to want more than just a clean beat. The scale of any upside surprise will matter, and we’re expecting something closer to $81.4bn, representing year-on-year growth of 85%.
The company has already given a broad steer for calendar 2026 revenue, so attention is likely to shift quickly to any colour on 2027, where investors are starting to think harder about the pace of growth beyond the current buildout. Commentary on the Vera Rubin roadmap will also be closely watched, with recent rumours pointing to a potential one-month delay. In isolation, that would be relatively small, but investors will not want to see anything that suggests a more material pushback for Nvidia’s next major product cycle.”
The author holds shares in Nvidia.
