Blue-chip set to rise ahead of key earnings reports

Monday July 22, 2024 4:54 AM

FTSE 100 Today: Blue chips set to rise ahead of key earnings reports

Market moves today: Asian stocks fall, Joe Biden drops out of re-election race, China surprises with interest rate cut; big tech and banking earnings in focus this week

Asian stocks continued to fall on Monday despite a surprise rate cut by China’s central bank. Wall Street futures, however, gained after President Joe Biden announced his withdrawal from the election race. Oil prices rose as investors looked for signs of an impending rate-cutting cycle, likely starting in September. Gold prices rose, supported by a weaker dollar and hopes for a U.S. rate cut, and market attention shifted to economic data for more on the Federal Reserve’s plans. China’s central bank cut short-term interest rates to support its economy. This week’s focus will be on U.S. inflation data and earnings reports from major companies and European banks. The Bank of Canada is expected to cut its rates to 4.5 percent on Wednesday. Key Wall Street reports include Alphabet, Tesla and Spotify on Tuesday, while Santander, Deutsche Bank, Lloyds and NatWest will report later in the week. Several major FTSE 100 companies will report their quarterly earnings this week, including telecoms giants Vodafone and BT, as well as pharmaceutical leader AstraZeneca. Here are five key takeaways from today.

CChina’s central bank cuts short-term interest rates to boost economic support

The People’s Bank of China cut its key short-term interest rate for the first time since August 2023, aiming to provide more support to the economy amid an upcoming rate cut by the Federal Reserve.

On Monday, the seven-day reverse repo rate was cut by 10 basis points to 1.7% to strengthen measures to support economic stability.

In addition, one-year and five-year prime mortgage rates, the main benchmarks for bank loans, were cut by 10 basis points to 3.35% and 3.85%, respectively.

These actions are in line with the central bank’s plan to implement an interest rate-based approach to better manage interest rates.

Joe Biden Ends Re-election Run, Endorses Harris as Democratic Candidate

Facing mounting pressure from his fellow Democrats, President Joe Biden dropped out of the re-election race on Sunday, endorsing Vice President Kamala Harris as the party’s nominee against Republican Donald Trump in November.

Biden’s announcement, made in a letter shared on social media, revived the presidential campaign four months before the November 5 election.

Great Britain initiates a thorough overhaul of the pension system to stimulate economic growth

The new Labour government in the UK is re-evaluating the pension system to find ways to direct more investment into productive assets, with the aim of boosting economic growth and improving retirement incomes.

The review, announced on Saturday, will focus on boosting the investment capacity of the £360 billion Local Government Pension Scheme (LGPS), which manages the pension savings of local government employees across the UK.

INwhat’s worth watching this week

This week promises to be a turbulent one for markets, with US inflation data likely to bolster expectations for a rate cut in September.

Earnings season is heating up, with major companies and a number of European banks due to report. Eurozone PMI data will provide more clarity on the path to the next rate cut by the European Central Bank.

Important quarterly earnings reports from FTSE 100 companies are due to be published in the UK this week, including telecoms giants Vodafone and BT, as well as pharmaceutical giant AstraZeneca.

The Bank of Canada is expected to cut interest rates by a quarter percentage point to 4.5 per cent on Wednesday.

On Wall Street, several major companies are set to report their second-quarter earnings. Alphabet, Tesla and Spotify will report on Tuesday.

Banking giants such as Santander and Deutsche Bank will publish their results on Wednesday, followed by Lloyds on Thursday. NatWest will end the week with interim results on Friday.

ANDsian shares fall amid China interest rate cuts

Japan’s Nikkei N225 index fell 0.9%, while South Korea’s KS11 index fell 1.0%. Chinese blue-chip stocks, represented by the CSI300, were steady, although they had risen almost 2% in the previous week. Hong Kong stock futures suggested a steady open.

The S&P 500 fell 0.7% on Friday, ending its worst week since April. The Nasdaq 100 also fell about 1%, and the Russell 2000 index of smaller companies fell 0.6%.

In the commodities market, gold remained at $2,408 an ounce, close to the record high of $2,483.60 reached last week.

Oil prices rose slightly, with Brent crude up 43 cents to $83.06 a barrel and U.S. crude up 55 cents to $80.68 a barrel. This comes amid the ongoing conflict in the Gaza Strip, where Israeli forces and Palestinian militants clashed in Rafah on Sunday, with no signs of a ceasefire.