European stocks inched higher on Monday ahead of Fed’s interest rate decision later in the week. UK’s FTSE 100 index jumped 0.37% ahead of Boohoo and Tesco earnings. Other European indices like Germany’s DAX index, French CAC 40 index and Euro STOXX 50 gained 0.25%, 0.40% and 0.31% respectively.
Boohoo and Tesco’s earnings
The FTSE 100 index will react to earnings by Boohoo, an online fashion titan, which are due on Tuesday, this week. With the easing of lockdown restrictions, the company is expected to grow. Customers can now purchase their clothes from the company’s retail stores.
The firm’s revenue growth is the key focus as investors watch for any signs of hiccups. Investors are also closely watching its performance in the US markets which is a key source for future growth. Boohoo plans to acquire more warehouses and expand its company. The company’s capital expenditure is expected to be between £125 million and £175 million.
The FTSE 100 index will also react to Tesco’s earnings to be released on Friday. The company’s market shares slightly eased mid-May. The company expects its sales to be firmer this year as it records strong recovery in its profits and retail cash flow.
Economists will be watching how Tesco’s Aldi Price Match and Clubcard Price schemes will perform. They helped the company’s market shares jump 24.7% 12 weeks before April. This was the highest level since January 2019 but reduced by mid-May.
Economic Concerns
Senior ministers in the United Kingdom signed off a decision to delay the lifting of all legal Corona virus restrictions. The extension will be put to a Commons vote later this month. This delay will enable efficient vaccination rollout for both the first and second doses.
Markets are closely eyeing the Fed’s policy makers eager to get clues about bond purchases, inflation, and future interest rates. The Fed’s rate-setting body, the Federal Market Committee (FOMC) are expected to hold a meeting on Tuesday and Wednesday.
The meeting will include a new version of the committee’s economic projections and members’ updated forecasts for inflation and growth. Fed officials could project an interest rate liftoff in 2023 amid faster economic growth and inflation.
FTSE 100 Performers
Some of the top performers in the FTSE 100 index include Royal Dutch Shell, Halma plc, Just Eat Takeaway.com, and BT Group plc. Royal Dutch Shell was the best performer after a 2.34% jump in its stock prices. Halma plc, Just Eat Takeaway.com and BT Group plc each gained 1.90%, 1.83% and 2% respectively.
Among the drags in the index include Rolls Royce Holdings plc, International Consolidated Airlines Group SA, and Polymetal International plc. Each declined by 2.72%, 2.12% and 1.86% respectively.
