The FTSE 100 Index futures pulled back on Monday as geopolitical tensions rose after the weekend talks between the US and Iran followed by President Donald Trump’s decision to enact a blockade on the Strait of Hormuz. This article explores some of the top FTSE companies to watch this week.
Tesco stock in focus ahead of earnings
Tesco, the biggest British retailer, will be in the spotlight this week as it releases its financial results on April 16. These results come as its stock remains in a narrow range near its all-time high.
Analysts believe that Tesco’s business did well as its market share continued to grow. In its last trading statement, the company said that its share jumped to the highest level in over a decade, helped by the robust food sales.
The management boosted the outlook after the strong Christmas season. It expects the upcoming numbers to show that its operating profit jumped to the upper side of the previous guidance of between £2.9 billion and £3.1 billion.
Tesco will likely deliver a strong forward guidance, helped by the ongoing market share gains in the country.
Shell and BP in focus as crude oil prices jump
Top energy companies in the FTSE 100 Index have done well this year, with Shell and BP hovering at their all-time highs as crude oil and natural gas prices soared.
Shell stock peaked at a record high of 3,595p and then pulled back to 3,420p after President Donald Trump announced a ceasefire with Iran. This ceasefire pushed crude oil prices by over 15% within a day. BP stock also jumped to a record high of 608p and then retreated to 575p.
The two stocks will likely remain on edge this week as traders focus on the new developments, including the decision by Trump to place a blockade in the Strait of Hormuz.
Trump is disappointed that Iran has continued to charge tolls for ships crossing the Strait. He hopes that the blockade will deprive Iran of finances and possibly end the regime.
However, the strategy has pushed crude oil priceshigher, which may fuel inflation in the US. A report released on Friday showed that the headline Consumer Price Index rose to 3.3% in March this year.
As such, with his approval rating falling, Trump may work to prevent the calm of the markets as he has done every Monday since the war started.
Rolls-Royce Holdings and IAG
Companies in the civil aviation industry have been highly volatile as the Iran war has continued. IAG, the parent company of British Airways and Aer Lingus, initially plunged from 465p on February 27 to a low of 332p on March 23. It then rebounded to 390p after the ceasefire, which reduced the jet fuel prices.
Rolls-Royce Holdings, on the other hand, plunged from a high of 1,420p to a low of 1,080p in March. It then bounced back to 1,267p after the ceasefire.
The company is affected by the crisis in the civil aviation industry because it makes most of its money in long-term service contracts. These contracts are structured in such a way that it only makes money when the engines are flying.
Therefore, signs of an escalation in the Middle East will push it lower. On the other hand, signs of the war ending will lead to more gains in IAG and Rolls-Royce share prices.
UK banks to react to US banking earnings season
Top UK banks like Lloyds, Barclays, HSBC, Standard Chartered, and NatWest will also be in the spotlight this week as their American counterparts publish their financial results later this week.
Goldman Sachs will be the first one to release its numbers, while other companies like Bank of America, Morgan Stanley, JPMorgan, and Citigroup.
Historically, these earnings normally set the tone for other top global banks, which will publish their financial results later. Lloyds Bank and Standard Chartered published their numbers on April 29 and 30, while NatWest, HSBC, and TBC Bank will release their numbers earlier next month.
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