Must read: risk-on mood as investors pin hopes on Fed cut, TUI, UK GDP

GLOBAL MARKETS 

The FTSE 100 has opened higher along with the DAX and CAC 40. However, Beazley (LSE:BEZ) has plunged to the bottom of the UK index after the insurer reduced its annual growth outlook. Persimmon (LSE:PSN) is another loser on the blue-chip index after earnings, while Balfour Beatty (LSE:BBY) is trading slightly higher following its half-year results.

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In terms of data, Germany’s wholesale inflation slowed to 0.5% in July from 0.9% in June. The monthly reading hit -0.1%, below forecasts for a positive print of 0.2%. 

Global markets are in an upbeat mood with the S&P 500 and Nasdaq closing at all-time highs. The Nikkei in Japan also closed at a record high this morning. It comes after US inflation remained at 2.7% last month, below expectations for 2.8%, prompting markets to price in a near certainty that the Fed will cut interest rates by 25bps in September.

Markets are willing to overlook a quicker than expected increase in July’s core CPI, which hit 3.1%. Investors will be paying attention to Fed President comments today from Goolsbee, Barkin and Bostic. 

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Oil is treading water around two-month lows in anticipation of US President Donald Trump’s meeting with Vladimir Putin on Friday in Alaska to discuss Ukraine. Before that, leaders from Ukraine and Europe will speak to President Trump virtually today. But the US president has been playing down chances of a ceasefire this week.

Meanwhile, in OPEC’s latest monthly report, it raised its global oil demand outlook for 2026 to 1.38 million barrels per day and reduced its supply outlook for countries outside the cartel.

TUI 

TUI AG (XETRA:TUI1) reported quarterly earnings (EBIT) of 321 million euros, beating analysts’ expectations and rising 38% year-on-year. Revenue also grew by 7% to 6.2 billion euros. Yesterday Tui raised its profit guidance – it now expects underlying EBIT growth of between 9% and 11%, up from its previous guidance for between 7% and 10%. 

It looks like the summer performance so far has held up much better than anticipated. Last quarter Tui warned about a potential drop in summer bookings amid the macro uncertainty and European heatwaves. However, this week, that sense of nervousness has reversed course with a guidance uplift for the full year and a top and bottom line beat.

Hotels and resorts, and cruises were a bright spot for Tui, while airlines remain challenging. Tui’s CEO Sebastian Ebel said there is a decline in US business with customers travelling to Canada, Africa and Asia instead. He also said that the Middle East conflict hurt business significantly. 

Traders are encouraged by today’s update with shares in Tui staging gains this morning. The stock is up by around 45% over the past year.

UK GDP PREVIEW 

Tomorrow brings a preliminary estimate for second-quarter GDP in the UK.   

It is expected to show modest growth of around 0.1% in the second quarter, down from 0.7% in the first quarter. Focus will also be on June’s monthly reading, which is seen coming in roughly flat, a slight rebound from the unexpected decline of 0.1% in May and a drop of 0.3% in April. 

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After a strong start to the year when the UK was crowned the fastest-growing G7 economy in Q1, recent weaknesses in the data paints a much gloomier picture. Plus there is also a risk that the impressive growth seen in the first three months could be revised lower. After cutting rates, the Bank of England said this week that underlying UK GDP growth has remained subdued, highlighting “downside domestic and geopolitical risks”.

Recent figures suggest that the UK economy is struggling – the latest S&P Global Construction PMI in July posted its steepest drop since May 2020, a recent survey from Deloitte found that UK consumer sentiment had its biggest contraction in nearly three years, and this week’s unemployment rate remained at a four-year high, pointing to continued slack in the labour market. 

The UK is buckling under the pressure from President Trump’s global trade instability, a reluctance among businesses to hire, above-target inflation and a fiscal black hole that increases the chances of higher taxes in the Autumn Budget.