The FTSE 100 rose on Monday as investors geared up for a busy week of central bank action, which will see interest rate decisions from the Bank of England, the Federal Reserve, and the ECB.
European stocks started the week on a positive note, with financial and energy shares helping the FTSE 100 rise 0.2%.
“Equity markets pushed ahead in Europe despite oil prices creeping ever higher,” says Russ Mould, investment director at AJ Bell.
But a series of central bank meetings later this week means the relative calm in markets may not last for long. The meetings will provide an insight into central bank thinking and help set expectations for interest rates later this year.
Investors will watch keenly for any hint of interest rate hikes that could upset demand for risk assets through the summer.
“Central bankers meet this week just as warnings about a severe energy crunch mount,” said Susannah Streeter, chief investment strategist, Wealth Club.
“While no change is expected at the Bank of England, the Fed or the European Central Bank, outlook statements will be closely watched for guidance about what could lie ahead for interest rates. Officials at the Bank of England are set to stay super wary.
“While price pressures are clearly mounting, the economy is set to struggle and that could limit the chances of inflation becoming embedded. So, while they are likely to indicate that a fresh hike could be ahead, there are unlikely to be any knee-jerk moves, until there’s more clarity about the length of the Iran conflict. “
FTSE 100 movers
Burberry was the FTSE 100’s top riser as the luxury brand continued its recovery from the war-induced sell-off. The decline in Middle Eastern shoppers in Europe has been a major concern for luxury names, but the recent rally suggests those worries are starting to subside.
M&G rose 1.7% after Berenberg analysts bumped their price target up to 370p.
Whitbread was among the gains on reports it was planning to sell off £1.5bn worth of its hotels.
“Reports suggest it will sell one in five of its freehold hotel properties and lease them instead,” Russ Mould said.
“It is increasingly common for hotel operators not to own the buildings in which they operate, and for Whitbread it would mean a big cash injection and a pot of money that could be returned to shareholders.
“Whitbread has found life harder going in recent years, particularly in the UK, and needs to do something to win back the market’s support.”
Asia-focused financials Standard Chartered, HSBC and Prudential caught investors’ attention on Monday with the three all trading higher by around 1%.
Firmer oil prices made BP and Shell obvious places to deploy cash. BP rose 1.1% and Shell was 0.5% higher.
Entain was the FTSE 100’s top faller after Bank of America analysts slashed its rating to neutral.