The FTSE 100 and FTSE 250 Indices remained in a tight range on Monday as market participants waited for major macro events and earnings from British companies. This article explores some of the top catalysts to watch this week.
FTSE 100 and FTSE 250 indices to react to Bank of England interest rate decision
One of the main catalysts for the FTSE 100 and FTSE 250 indices will be the upcoming Bank of England (BoE) interest rate decision, which will happen on Thursday this week.
Economists polled by Reuters expect the bank to leave interest rates unchanged at 3.75% as officials remain concerned about the elevated inflation.
The most recent results showed that the headline Consumer Price Index (CPI) rose to 3.8% in December, higher than the bank’s target of 2.0%. Core inflation, which excludes the volatile food and energy prices, has also remained at an elevated level in the past few months.
Still, most officials, including Andrew Bailey, the bank’s governor, believe that inflation will continue falling in the coming months.
The BoE outlook explains why UK bond yields have remained unchanged in the past few months. Data shows that the ten-year bond yield has remained unchanged at 4.50%, while the five-year was at 4.6%.
Top UK companies to publish earnings
The other key catalyst for the FTSE 100 and FTSE 250 indices are the upcoming earnings from some of the biggest companies in the UK.
GSK, a major pharmaceutical valued at over $103 billion, will release its results on Wednesday.
Shell, the biggest energy company in Europe, will release it on Thursday. These numbers come as the energy market continued doing well because of the rising geopolitical tensions between the United States and Iran.
Unilever, a major player in the Fast Moving Consumer Goods Industry (FCMG), will release its numbers on Thursday.
More companies like Entain, Watches of Switzerland BT Group, Compass Group, and Vodafone will also publish their numbers.
On top of this, hundreds of American companies, including popular names like Amazon and Google, will publish their financial results. Historically, these companies often have an impact on the global financial market.
Commodity prices to impact UK stocks
The other major catalyst for the FTSE 100 and FTSE 250 indices is the performance of key commodities. Gold, copper, and silver prices tumbled on Monday, affecting key companies in the industry.
Indeed, data shows that the Fresnillo stock price crashed by 7% as silver plunged. Fresnillo is one of the biggest silver miners globally. It has been one of the best-performing companies in FTSE 100 Index in the past few months as silver jumped.
Endeavour Mining’s stock price dropped by 6.8% as gold prices dropped. Other mining companies like Antofagasta, Anglo American, Rio Tinto,and Glencore were among the top laggards in the FTSE 100 Index on Monday.
Geopolitical events to impact British stocks
The FTSE 100 and FTSE 250 indices will also react to the upcoming geopolitical developments in the Middle East.
Donald Trump has warned that he may attack Iran as soon as his armada near the region. Trump has accused the Iranian regime of killing protestors and for having nuclear ambitions. Also, Trump wants Iran to dismantle its civilian nuclear ambitions and limit its ballistic missile program.
An attack would have major implications in the US and UK equities as it would lead to higher oil prices and inflation. It would also disrupt the travel activity in the region, affecting companies like IAG and EasyJet.
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