Proactive Investors -
- FTSE 100 up 8 points at 7,674
- House prices rise 0.7% in January
- US interest rate decision after London close
Nasdaq set to open sharply lower
The Nasdaq is expected to open sharply lower after several tech giants failed to live up to much-hyped expectations when reporting earnings.
In pre-market trading, futures for the Dow Jones Industrial Average were up 0.1%, while those for the S&P 500 were down 0.5% and contracts for the Nasdaq 100 futures declined 1.2%.
Alphabet (NASDAQ:GOOGL) fell 5.6% after revenue at its core Google business disappointed despite an overall earnings beat, while AMD (NASDAQ:AMD) slid 6.0% on a weak outlook.
Microsoft (NASDAQ:MSFT) held up better with shares down 0.7% after sold looking earnings while Tesla is down 3.0% after Elon Musk’s $55 billion pay package from Tesla was voided by a Delaware judge
Later in the session, the US Federal Reserve’s monetary policy committee will conclude its two-day meeting and release a statement on monetary policy.
Economists widely expect the central bank to hold interest rates steady at a target range of 5.25 to 5.5%.
Elsewhere, ADP payrolls data, plus earnings from Boeing (NYSE:BA), Mastercard (NYSE:MA) and Qualcomm (NASDAQ:QCOM) will hit the wires.
House prices likely to flatline
Martin Beck, chief economic advisor to the EY ITEM Club, thinks while a relatively shallow house price cycle is “good news in terms of maintaining financial stability and avoiding the experience of previous price corrections where large numbers of borrowers fell into negative equity, it's likely to limit the scope for house price growth in the near-term.”
Even if the interest rates fall in line with his expectation of a total of 125 basis points of cuts this year, mortgage rates will still be significantly higher than for much of the last decade or so.
As a result, he thinks this year will likely see house prices broadly flatline, rather than stage a significant rebound.
UK business confidence at two-year high, Lloyds
UK businesses started 2024 with their confidence at the highest level in nearly two years boosted by cooling inflation and hopes for interest rates cuts, according to a survey published on Wednesday.
The Lloyds Bank Business Barometer jumped by nine points to 44% this month, its strongest since February 2022.
Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking (LON:LLOY), said weaker inflation and hopes of interest rate cuts pushed the index to its highest level for the month of January since 2016.
"With ongoing geopolitical issues and a general election on the horizon, businesses will have factored these into their risk radars and will be working to prepare for any potential impacts on their trading prospects," he said.
"Also, half of all companies say they’re planning to increase headcount in the coming year. Despite that and the changes to minimum wage that will come into force in April, expectations for staff pay fell back following last month’s increase."
Companies also scaled back plans for increasing the prices they charge for a second month in a row, the first back-to-back decrease since June 2022, Lloyds said.