It’s been just over eight months since the FTSE 100 passed 8,000 points for the first time. Now the index looks like it might dip below 7,000 points before reaching that height again. Here are five things I’ll be watching on the stock market this week.
Base rate decision
All eyes will be on the Bank of England (BoE) on Thursday (2 November) when policymakers meet to decide on interest rates. With UK inflation still the highest in the G7 at 6.7%, the central bank is expected to hold rates steady at a 15-year high of 5.25%.
But there are fears that the impact of its 14 rate hikes between December 2021 and August 2023 have yet to be fully felt. Consequently, fears of a recession are growing… again.
To be honest, I’m surprised there hasn’t been one already. The UK economy is like a boxer on the ropes who just refuses to go down!
Anyway, the BoE is expected to signal that high borrowing costs are here to stay for a good while longer.
Markets aren’t anticipating a cut in the base rate before September 2024. Any revision to that timeline could have a big effect on stocks.
Data to digest
Before that, today (30 October) will bring consumer credit and mortgage lending figures from the BoE.
Last time, it was revealed that UK mortgage approvals rose in June and consumer credit grew at its fastest pace for five years. This defied analysts’ predictions at the time.
We’ll also see Eurozone Q3 GDP figures on Tuesday, with Germany’s economy expected to contract.
Footsie earnings
Moving on to stocks, some big hitters on the FTSE 100 are due to report earnings.
Today, mining giant Glencore is giving a quarterly production update, while BT Group provides its H1 update on Thursday.
Oil giants BP and Shell report on Tuesday and Thursday, respectively. Both stocks have outperformed again in 2023 due to elevated oil prices. And both can send the Footsie one way or the other due to their size.
Thursday will be the turn of Howden Joinery, which is releasing its first quarterly trading statement since re-entering the FTSE 100 in September.
Big Pharma
Next, there’s a flurry of Q3 reports due from Big Pharma, notably Amgen, Pfizer (both Tuesday), GSK (Wednesday), and Eli Lilly (Thursday).
Meanwhile, shares of mRNA pioneer Moderna (reporting Thursday) are down 60% this year as its Covid-related revenue continues to tail off. Pfizer is in a similar situation, but it has other products to take up the slack (unlike Moderna).
Novo Nordisk is also set to update the market on Thursday, with investors fascinated by its weight-loss and type 2 diabetes drugs Wegovy and Ozempic.
The firm’s share price has more than doubled since Wegovy was approved in the US in June 2021. Novo is now Europe’s largest listed company.
I’ll be interested to see if McDonald’s comments on the potential long-term threat of appetite-suppressing anti-obesity drugs. The $186bn fast-food giant is due to release Q3 earnings today.
Luxury goods
Finally, luxury carmakers Aston Martin (Wednesday) and Ferrari (Thursday) are also slated to bring investors up to date.
Are the ultra-wealthy cutting back on sports cars? I suspect not, but we’ll have to wait to hear what these firms say.
