A slew of blue-chip results on both sides of the Atlantic will dominate the corporate news agenda this week, alongside key US economic data set to bolster the case for higher-for-longer interest rates.
The UK’s biggest banks will begin publishing their first-quarter earnings next week, with Lloyds Banking Group on Wednesday, Barclays on Thursday and Natwest on Friday.
Lenders are expected to report lower profits and narrower margins as the tailwind from interest rate hikes that boosted their earnings to record highs last year has died down.
However, they could raise their future earnings guidance as concern over the US economy and stickier-than-expected UK inflation has caused traders to slash their bets on rate cuts from the Bank of England in recent weeks.
Investors will also be monitoring any changes in loan defaults as the resilience of borrowers is tested by the tough economic backdrop, as well as comments from Lloyds and Barclays on the City regulator’s probe into unfair car loans that have left the motor finance sector exposed to billions of pounds in potential compensation fees.
Supermarket giant Sainsbury’s will report its full-year results on Thursday. Investors will be looking for more details on the firm’s three-year strategy unveiled in February, involving plans to cut some 1,500 jobs and reduce costs by around £1bn per year.
As part of its “food first” strategy, the UK’s second-biggest grocery chain plans to slash the amount of general merchandise and clothing it sells in its shops.
Associated British Foods (ABF), which owns Primark, Twinings, British Sugar, Allinson’s and Sunblest, will report its first-half results on Tuesday.
Investors will see how the earnings stack up against ABF’s guidance given last November and repeated in a January trading update that it expected “meaningful progress in both profitability and cash generation”.
Across the pond, Tesla, Meta, Alphabet and Microsoft are all due to report results this week. The firms are seen as important bellwethers for their industries and are part of the so-called “Magnificent Seven” group of tech stocks, which led the S&P 500 to a 24 per cent gain last year amid a boom in demand for artificial intelligence.
The US stock market has been spooked in recent weeks by increasing uncertainty over interest rate cuts from the Federal Reserve. Fresh data due to be published on Friday is set to reaffirm policymakers’ belief that rates should stay higher for longer than previously expected.
The personal consumption expenditures price index, the Fed’s preferred gauge for inflation, is expected to remain elevated in March – with the core metric rising 0.3 per cent from February.
Policymakers will be under a communications blackout ahead of their next meeting, due to conclude on 1 May. They are almost certain to hold interest rates at a 23-year high of between 5.25 and 5.50 per cent.
The Fed’s stance on rate cuts is seen as a crucial factor in other central banks’ decision-making.
