The FTSE 100 was higher on Monday as investors geared up for a busy week of central bank action and further earnings from the world’s biggest companies.
The FTSE 100 was 0.78% higher at 7,348 at the time of writing.
“European equity indices pressed ahead at the start of the new trading week as investors slowly regain their appetite for riskier investments following last week’s tough spell for stocks,” said Russ Mould, investment director at AJ Bell.
“The FTSE 100 advanced 0.9% to 7,356 as investors flocked to the technology, consumer, industrials, utilities and basic materials sectors. Airtel Africa took the top slot on the blue-chip risers, up nearly 7% thanks to reporting strong customer growth.”
Later in the week, the Bank of England is widely expected to keep rates on hold on Thursday as UK economic data worsens, despite inflation remaining significantly above their 2% target.
Also on Thursday, the FTSE 100’s largest company by market cap, Shell, is scheduled to report earnings during a volatile period for energy prices. BP will issue its third quarter results tomorrow.
The two oil majors account for a substantial proportion of the FTSE 100 and have the power to move London’s leading index.
US interest rates & Apple
In the US, the Federal Reserve will release its interest rate decision on Wednesday. Economists expect the Fed to keep rates on hold.
Apple, the world’s largest company by market cap, will report earnings on Thursday, marking the end of earnings season for major technology companies.
Technology companies have reported mixed earnings in recent weeks, culminating in the NASDAQ entering correction territory last week.
HSBC
The release of HSBC’s Q3 results rounded off the latest batch of earnings updates from FTSE 100 banks on Monday. Unlike their FTSE 100 peers, HSBC announced a fresh wave of share buybacks, which were the highlight of the £117m market cap bank’s release.
HSBC shares were down 0.6% at the time of writing – the decline may have been materially larger if it wasn’t for the $3bn buyback.
“A larger than expected share buyback seems to be doing a lot of the heavy lifting for HSBC today – making up for some less than positive details in its third quarter results,” Russ Mould said.
“What may sober up any investors drunk on a $3 billion handout is the higher-than-expected cost growth now expected for 2023. Management had made keeping a tight rein on any outgoings a key part of their strategy, so to fall down on this point does some damage to their credibility.
“Given part of the bloated costs relates to higher performance-related pay, HSBC could be exposed to some political or even regulatory blowback.
“For now, HSBC, whose horizons go far beyond the UK, is seen in a much better light by the market than its rivals and it is notable to see it sticking with its return on equity targets for 2023 and 2024.”