- Summary:
- The FTSE 100 index pulled back slightly as investors continued focusing on the ongoing earnings season in the US and UK.
The FTSE 100 index pulled back slightly as investors continued focusing on the ongoing earnings season in the US and UK. The index is trading at £7,200, which is slightly below Monday’s high of £7,277. However, this price is substantially higher than last week’s low of £7,000.
Key catalysts for UK stocks
Mining stocks will be in the spotlight on Monday as companies in the sector warned about demand. In a statement, BHP said it had started seeing demand decline across all its commodities. The firm attributed this slowdown to the ongoing economic weakness as the war in Ukraine continues.
Most importantly, the company said that the cost of doing business was sliding. The results mirror those of Rio Tinto, which is another giant FTSE 100 mining company. These firms have been hit as iron ore prices have plunged below $100 a ton. BHP’s CEO said:
We expect the lag effect of inflationary pressures to continue through the 2023 financial year, along with labor market tightness and supply chain constraints.”
The other catalyst for the FTSE 100 index is the formation of a new company known as Haleon. The new firm, formed from GSK and Pfizer’s consumer health brands, started trading on Monday. It became the biggest consumer health company in the world. As a result, GSK, a member of the FTSE 100, saw its stock fall by almost 20%.
The FTSE 100 index will react to earnings from the UK and the US. Some of the top UK companies that will publish their results this week are Wise, City of London Investments, Royal Mail, Centamin, Volution, and Beazley. In addition, firms like Netflix, Tesla, Truist, and Johnson & Johnson will publish their results in the US.
FTSE 100 forecast
The hourly chart shows that the FTSE 100 futures pulled back after soaring to £7,277 on Monday. The index has dropped below the important level at £7,228, which was the highest point on June 12th. However, it remains slightly above the 50-period moving average, while the RSI has moved slightly below the neutral point at 50.
Therefore, the index will likely continue falling as investors reflect on the upcoming earnings. Expectations are that most companies will publish weak quarterly results as inflation surged. As such, the key level to watch will be at £7,100. A move above the resistance point at £7.228 will invalidate the bearish view.
