FTSE 100 leads in early trade, with US earnings and data set to dominate the week ahead

• Ocado helps lead FTSE 100 gains, following claims they could relist in the US
• US tech earnings in focus
• US GDP and inflation in view, with concerns over whether we will see a 2024 rate cut

The FTSE 100 has seen a welcome resurgence in early trade today, with the index surging 1% this morning. The widespread gains seen for the index have seen the retailers and supermarkets come in for particular strength, led by Ocado’s 5% gains as shareholders push for the company to shift their listing over to the US. The relatively elevated US-valuations have been a key concern for UK businesses, with CEO’s faced with the prospect of either moving their listing or fending off interest from hungry US companies seeking to employ a M&A led growth model. Shell Chief Executive Wael Sawan’s recent comments signalled as much, warning that the company could move their listing should their valuation continue to suffer compared with their US-competitors. The news that US company Quanex looks set to obtain London-listed Building supplier Tyman highlights the ongoing trend that will likely continue to see businesses either relist or risk being bought out.

Investors sentiment looks likely to remain unsteady as we enter a critical week from both an earnings and economic perspective. Coming off the back of the worst week for the S&P 500 in over a year, we only saw roughly 80% of the index lose ground. There is a hope that this week’s big tech earnings could help alleviate some of that selling pressure, with updates from the likes of Microsoft, Meta, Alphabet, and Tesla ensuring that the so-called Magnificent seven remain in the limelight after a particularly torrid time for Nvidia and Tesla shareholders. However, there is a fear that the AI premium paid for those big tech names could start to reverse unless we start to see those investments drive a meaningful improvement to the bottom-line.

While the Federal Reserve may have entered a blackout period this week, their silence will do little to stifle concerns over the trajectory of US inflation and interest rates. This week sees the US report both growth and core PCE inflation data, with equities likely to suffer in the event of any strengthening in these metrics. With markets having spent much of this year reassessing their expectations from the Fed, we are now facing a strong possibility that rate cuts are pushed out to 2025. Fortunately, we have seen some of the heat come out of the energy markets, with WTI down $6 from its recent peak, and US Natural Gas prices remaining around the lows seen prior to the Russia-Ukraine conflict.