Market snapshot: cautious start to a busy week

It rarely gets busier than this, with a US central bank policy decision and GDP data, plus some of the world's biggest companies reporting quarterly results, all in the same week. 

Investors start the week with some trepidation, ahead of the latest Federal Reserve decision and a barrage of corporate earnings on both sides of the pond.

The main US indices ended Friday in the red, although for the week as a whole they made some progress on the back of some company earnings which, in a sign of the times, were much less weak than had been feared.

Snap Inc Class A (NYSE:SNAP) upset the earnings applecart later in the session on weak sales growth, sending alarm signals across the technology sector in general, leaving the Nasdaq down by 2% on the day. 

Meanwhile, a survey on business activity revealed a contraction for the first time in almost two years, consolidating concerns of recession against a backdrop of rising interest rates, soaring inflation and waning consumer confidence.

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In the meantime, the latest Federal Reserve decision on interest rates will be announced on Wednesday, with the likelihood of a further 0.75% hike very much baked into the cake. There is also the release of the second-quarter US GDP number, which could show another negative reading.

In tandem, the economic data is tending to suggest that interest rate hikes are already beginning to stunt growth, and further data as it emerges will reveal whether the world’s largest economy is anywhere near recessionary territory.

With a packed corporate calendar ahead, including results from the likes of Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Meta Platforms Inc Class A (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT) and Alphabet Inc Class A (NASDAQ:GOOGL), the indices have been unable to shake off recessionary fears. In the year to date, the Dow Jones is down by 12%, the S&P500 by 17% and the Nasdaq by 24%. 

Nor is the earnings reporting pace slowing in the UK, with numbers expected from the likes of Shell (LSE:SHEL) and Unilever (LSE:ULVR), as well as updates from Lloyds Banking Group (LSE:LLOY), Barclays (LSE:BARC), Standard Chartered (LSE:STAN) and NatWest Group (LSE:NWG).

For the banks, eyes will be on whether any credit quality deterioration is being experienced and, of equal importance, whether the banks will be setting aside further cautionary provisions after beginning a new trend at the firs-quarter numbers. More positively, the banks are expected to remain awash with capital, providing the possibility of further shareholder returns either through buybacks or additional dividend payments.

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Ahead of these numbers, the mood remains contemplative, with the FTSE100 having slipped in early exchanges, following a weaker lead from Asian markets. A number of broker downgrades across several sectors did most of the early damage .

Even so, in relative terms the UK’s premier index continues to show its mettle compared to many of its global peers, having dipped by just 1.8% in the year to date against a host of challenges which for the moment show few signs of abating.