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Like a teenager still adjusting to being back at school, the FTSE 100’s recent lethargy continued as the index traded lower at the start of the new trading week, says AJ Bell Investment Director Russ Mould.
US indices may have clawed their way to new record highs last Friday and the Nikkei 225 bounced back on Monday, but UK stocks were held back by weakness in the telecoms, retail and airline sector.
The mining sector was in demand, particularly precious metal producers after gold hit a new record. The traditional safe-haven asset is benefiting from hopes for further rate cuts as well as continuing geopolitical uncertainty, big government debt in the developed world, and demand from central banks.
US futures prices indicate Wall Street will open lower and investors will be watching closely for any fall-out in the technology sector from the sharp rise in H1-B visa fees – affecting skilled foreign workers.
The news sparked some initial confusion around whether it would affect current visa holders and while this fear has been addressed and it has been confirmed as a one-time fee, it could still have a significant impact on tech firms. Many in the sector employ large numbers of people on these visas.
Signs of strong demand for Apple’s iPhone 17, after its launch at the end of last week, have lifted some of the company’s suppliers so it will be interesting to see if Apple’s own shares can sustain the momentum they enjoyed on Friday.
Later today we’re scheduled to hear from recent Trump appointee to the Federal Reserve, Stephen Miran, and Fed chair Jerome Powell is also set to speak tomorrow. Their words could offer some clues about the likely trajectory of US rates in the remainder of the year.
The big market moving announcement is likely to be the US PCE inflation report later this week – which is always closely followed by the Fed when making its interest rate decisions.
Airport cyberattack
Shares in airline operators flew lower after a weekend of hell for travellers. The cyberattack on check-in software used by airports in London, Berlin and Brussels caused widespread pain, with flights delayed or cancelled. Airlines rely on efficiency to make money, and any disruptions can have a snowball effect.
There will be some irate operators demanding answers as to why software provider Collins Aerospace didn’t have robust enough systems to block a cyberattack. Collins is owned by US-listed RTX, whose share price is likely to come under pressure when Wall Street opens for trading later today.
Investors might take the view that RTX’s reputation will be battered and bruised by the incident, and that could cause potential customers to think twice about ordering its systems or existing customers to consider alternative options.
EasyJet was among the airlines caught up in the drama, extending a bad run for its share price that’s been in motion since June. After yet another summer clouded by air traffic control strikes, EasyJet has now had to endure more cancellations and a queue of angry customers.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
