The FTSE 100 was broadly flat on Monday as investors prepared for the UK and US earnings seasons to ramp up in the coming days.
The FTSE 100 was trading down by just 2 points at 7,911 at the time of writing.
Analysts suggested today’s slow trade should be enjoyed as several risks persist that have the potential to spark volatility in stocks.
“All said and done, the global macro backdrop remains considerably more uncertain than normal and the tranquillity in equity markets should be enjoyed while it lasts,” said Rupert Thompson, Chief Economist at Kingswood
The first potential market-moving consideration is the increased flow of Q1 UK company trading and earnings updates.
FTSE 100 earnings highlights this week include Associated British Food, Whitbread, Reckitt Benckiser, Unilever, Barclays, Standard Chartered, and NatWest.
Barclays, Standard Chartered and NatWest results will be poured over for any signs of stress from the mini-banking crisis saga.
Major US tech companies will also report earnings this week, with Microsoft, Meta and Amazon set to release Q1 earnings.
“In the US, all eyes are on the big tech names which report earnings throughout the week. Tuesday sees Microsoft, Alphabet and Visa report numbers, with Meta Platforms on Wednesday, and Amazon and Mastercard on Thursday,” said Russ Mould, investment director at AJ Bell.
“Cost-cutting has been a key driver for many of their share prices in recent months, yet investors will want to know that underlying business is still healthy otherwise the recent rally in US tech names could grind to a halt.”
From an economic perspective, the first quarter was not as soft as initially thought, and this may support earnings and provide upside surprises. A number of companies have already warned profits would fall.
US GDP and the Fed
In addition to UK company earnings, markets will digest economic data points ahead of key central bank meetings in the coming weeks.
“In the US Q1 GDP, the employment cost index, core PCE, and consumer confidence are the highlights with us now in the Fed blackout period ahead of next week’s FOMC,” wrote Deutsche Bank Strategist Jim Reid.
“Meanwhile, we will see inflation and growth data in the Eurozone, and the BoJ’s decision in Japan on Friday.”
FTSE 100 risers
UK retail stocks were among the top performers, with JD Sports out in front, gaining 2% and Burberry adding 1.5%. Next was up 1.4%.
abrdn was 1.3% higher as the investment manager bounced off strong support just beneath 200p.
FTSE 100 fallers
Melrose was the top faller – down 3% – after completing the demerger of Dowlais Group last week. Fresnillo was 2% weaker, tracking the downside in gold and silver prices.
Thirty-nine of the FTSE 100’s constituents were down on Monday, with all but four down less than 1%.