- US equities edged higher on Monday, buoyed by banking and industrial equities.
- European markets fell on Monday as bank shares led drops.
- The UK’s FTSE 100 managed to post modest gains as a weaker pound boosted the share of overseas businesses.
US equities edged higher on Monday, buoyed by banking and industrial equities, as investors prepared for a busy week of corporate results. Federal Reserve officials’ remarks could also provide additional insight into the future direction of interest rates.
Markets are assessing the state of corporate profits and the economy following several US banks’ impressive first-quarter earnings last week.
On Monday, the New York Fed said that its gauge of industrial activity in New York State grew in April for the first time in five months/ This supports the argument for the US central bank to lift rates at its meeting next month.
The US central bank is expected to lift interest rates by 25bps to a range of 5%-5.25%.
After financial giants like JP Morgan Chase & Co. profited last week from increased interest payments, investors look forward to further results from major US banks this week. These include Goldman Sachs Group Inc., Bank of America Corp., and Morgan Stanley.
Investors are also attempting to assess executives’ outlooks following a banking crisis last month that some believe could worsen an economic slump.
After five straight days of gains, European markets fell on Monday as bank shares led drops. Semiconductor companies fell in response to news that TSMC, the biggest contract chipmaker in the world, had lowered its projection for yearly costs.
European shares have gained approximately 10% this year, compared to the S&P 500 index’s gain of 7.5%. This is despite having a roller-coaster month due to the forced rescue of Credit Suisse and uncertainty on the outlook for interest rates.
On Monday, the UK’s FTSE 100 posted modest gains for a seventh consecutive session. A weaker pound boosted shares of overseas businesses even as large banks recorded their largest loss in more than three weeks.
The export-oriented FTSE 100 saw the biggest lift from consumer staples companies, which gained about 1% when the pound fell.
The FTSE 100 has increased for four weeks in a row. Investors are showing interest in sectors tied to commodities like energy and those thought to be recession-proof, such as consumer staples and pharmaceuticals.
