Market news today - can Friday's Wall St rally prop up global markets?

THE week on the markets has started in what’s best described as a cautious mood. It’s after a rally on Wall Street on Friday that saw the S&P 500 and the Nasdaq rise, after US jobs data showed new hires increased more than expected in May. The headline figure boosted investor morale as it signalled resilience in the US economy and importantly eased concerns a little over a possible recession. Although it did make it now more likely that US central bank, the Federal Reserve, will need to continue to raise interest rates if it wants to bring down inflation. 

Markets are forecasting a 31% chance of a Fed interest rate rise this month, up from 25% last Thursday, according to data from Refinitiv.

In Europe, Christine Lagarde, president of the European Central Bank is set to voice her views on the eurozone’s path for monetary policy in Brussels later on Monday.

In the commodities markets, the benchmark Brent crude oil price briefly jumped after Saudi Arabia said it would cut oil production by a million barrels a day in order to prop up prices. The cuts would initially be for July but may be extended a minister said. 

Asia’s markets were broadly up. That included Japan’s benchmark Topix stock index Australia’s S&P/ASX 200 and Hong Kong’s Hang Seng.

China though went the other way with the index of Shanghai and Shenzhen-listed stocks down despite a positive economic reading from the services purchasing managers’ index, which signalled sharper growth for the country’s service sector in May. 

Official media in China called on investors to have faith in the country’s domestic stock market, with the state-run Economic Daily suggesting that “clear-headed understanding, staunch confidence, resoluteness and patience” were the “chief responsibilities of all market participants”.

On UK markets, Debra Crew, interim chief exec at Diageo, the maker of Smirnoff vodka and Johnnie Walker whisky, has taken over a month earlier than expected, as longstanding boss Sir Ivan Menezes recovers from surgery.

Other stocks to keep an eye on this week include troubled transport operator FirstGroup. Recently stripped of its Transpennine Express contract in and out of Manchester, Leeds and Liverpool, it releases its full-year results on Thursday.

Just before the government announced that it wouldn’t be renewing the contract, FirstGroup had said that profits for the year were set to surpass previous targets after a pick up in bus and train demand. It also said adjusted operating profits for the 2023 financial year would be above previous guidance.

After the announcement on Transpennine, which now means the UK government controls four out of six of its train companies, FirstGroup said it was “disappointed” to lose the contract, but said it didn’t expect to incur material costs. But it’s worth noting that the Transpennine contract contributed £416m to the £4.6bn of revenue generated in 2022.

Results are also due out from British American Tobacco and Wizz Air. With the all-important summer holiday season on the horizon, all eyes will be on whether the cost-of-living crisis is prompting travellers to trade down. If that’s the case, Wizz Air, as one of Europe’s largest budget carriers, could be in for a bumper summer season. Wizz Air’s full-year results on due out on Thursday.

Spain’s Inditex, owner of fashion chain Zara, is due to give its quarterly update on Wednesday. Double digit sales and profits last time around pleased investors. The question is whether it’s kept going or cash-strapped consumers are now tightening their purse strings.

Over in the US, former Republican vice-president Mike Pence is expected to launch a presidential bid against his former boss Donald Trump.

And there are a couple of reports to watch out for this week. The World Bank unveils the summer edition of its Global Economic Prospects on Tuesday and the OECD releases its economic outlook on Wednesday.

In the UK, the release of the Halifax house price index and the one from the Royal Institute of Chartered Surveyors too will be closely watched. Not least by the 100,000 homeowners who are about to see their monthly repayments rise when they renew their deals after a weekend when Santander, the UK’s 3rd largest lender, took the highly unusual step of hiking rates on a Saturday as fears over inflation and cost- of-living pressures grow.

And finally, is the writing on the wall for UK business lobby group, the CBI? While its members vote on Tuesday on its “programme of change” after an exodus of members following allegations of sexual misconduct, the British Chambers of Commerce has revealed the formation of a new council. 

And as we know, timing is everything, so keep your eyes peeled for more from the new group, promising to “design and drive the future of the British economy”. Oil giant BP and hotel group IHG are two of the “prominent UK business leaders” that have already joined. 

Meanwhile though Siemens, the German conglomerate isn’t giving up on the CBI.  It’s urging other members of the lobby group to back it and so far has the support of US tech group Microsoft, and Esso Petroleum, a British subsidiary of energy giant ExxonMobil. So watch this space.

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