FTSE 100 shares round-up: GSK, Mag 7 review, interest rates

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Higher oil prices and risk aversion prior to a big night for Magnificent Seven results and Federal Reserve guidance today meant a tough backdrop for GSK (LSE:GSK) results in the FTSE 100 index.

The pharmaceutical giant’s shares traded below £20 a share for the first time in a month, despite reporting a strong first quarter and reiterating dividend guidance for the year.

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The FTSE 100 index continued its poor run since 17 April by dropping another 79.21 points to 10,253, with Next (LSE:NXT), Rolls-Royce Holdings (LSE:RR.) and BAE Systems (LSE:BA.) among the heaviest fallers.

Sentiment weakened across Europe as ongoing fears of stagflationary economic conditions were fuelled by the sight of Brent crude at a four-year high of more than $115 a barrel.

The benchmark is up for eight sessions in a row as stalemate in the Iran war creates one of the largest oil supply shocks on record, with volumes impaired well beyond typical geopolitical episodes.

UBS strategists said today: “Even if disruption stabilises from here, the shock already delivered has macroeconomic consequences.

“Higher energy prices, tighter financial conditions and confidence effects are likely to weigh on growth and earnings for months, with Europe particularly exposed.

“Markets appear to be currently underestimating the persistence of these second-round effects.”

Higher interest rate expectations have kept benchmark government bond yields well above pre-conflict levels, including in the UK after 10-year gilts last night closed above 5% for the first time since 2008.

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Policymakers typically look through supply shocks such as oil spikes, which is why economists are not expecting any immediate change in interest rates by the Federal Reserve tonight or by the Bank of England and European Central Bank tomorrow.

The base case of US economists at Deutsche Bank is that the Federal Reserve will wait until June for meaningful changes in guidance, although they warn of the risk that communications from the bank turn hawkish.

If oil prices remain high, UBS Global Wealth Management said today that it sees yields falling over the medium term as recession risks rise and rate cuts come back into focus.

It added: “We see current yields as attractive for investors looking to diversify their portfolios and boost income.”

The S&P 500 index yesterday fell 0.5% from Monday’s record close and is expected to open broadly flat ahead of tonight’s Federal Reserve guidance.

The outlook for AI capital expenditure will take centre stage after Wall Street’s closing bell when four of the Magnificent Seven - the hyperscalers Amazon.com Inc (NASDAQ:AMZN), Google owner Alphabet Inc Class A (NASDAQ:GOOGL), Microsoft Corp (NASDAQ:MSFT) and Meta Platforms Inc Class A (NASDAQ:META) - post quarterly results.

This group, alongside Oracle Corp (NYSE:ORCL), is expected to spend $680 billion (£503 billion) in capex in 2026, an estimate that’s already been revised up by nearly 30% year-to-date.

Bank of America said this week: “Capex revisions could have further to run if trends mirror recent years, although waning free cash flow is top of mind as capex as a percentage of operating cash flow is already forecast to exceed 90% this year.”

Some 180 companies representing about 40% of S&P 500 index earnings are due to report over the course of this week, including Apple Inc (NASDAQ:AAPL) on Thursday night and Exxon Mobil Corp (NYSE:XOM) on Friday.

The first two weeks of the reporting season covered about 140 S&P 500 companies equivalent to 33% of index earnings, with 62% ahead expectations for both their top and bottom lines.

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The UK first-quarter results season is at an earlier stage, with GSK among those in the spotlight today.

Group sales of £7.6 billion were 1% higher than City expectations after a 5% rise at constant exchange rates, boosted by 14% growth in the biggest division of speciality medicines.

Vaccines delivered a 6% beat on forecasts after Shingrix grew sales by 20% to £1 billion, aided by strong EU demand and inventory movements.

New boss Luke Miels reiterated guidance for group sales growth of between 3-5% at constant exchange rates, leading to 7%-9% improvement in core operating profit and earning per share. The shares fell 86.5p to 1,941.5p, although they remain 6% higher so far this year.

The group intends to pay a 17p quarterly dividend worth £684 million on 9 July, which represents a rise from last year’s 16p as part of 70p a share planned for this year.  The total for 2025 was 66p, an outlay of £2.6 billion that included this month’s payment of 18p a share.