UK Financial Markets: Three Things to Watch Out For This Week

Financial markets are gearing up for a busy week in the UK, with some key economic data releases and corporate earnings reports scheduled. Here are three things to watch:

Corporate Earnings

A number of major UK companies are scheduled to report their earnings this week, including BP, HSBC, and Moonpig. Investors will be looking for signs of how these companies are performing in the face of sticky inflation and elevated interest rates, which are impacting consumers.

  • BP: The energy giant is expected to report strong Q3 earnings this week on Tuesday, October 31, thanks to high oil and gas prices. However, investors will be watching for any signs that the company’s margins are being squeezed by increased costs.
  • HSBC: The global bank is expected to report a decline in Q3 earnings on Monday, October 30, as higher interest rates weigh on its net interest margin. Investors will also be looking for any signs that the bank’s bad loan ratio is rising.
  • Moonpig: The online greeting card retailer and 12th most shorted London-listed stock will report interim results on Tuesday, October 31. Semrush data shows a continued decline in visits to the Moonpig website — a potential sign that demand has been pressured. Investors will be watching for any signs that the company’s costs are rising as it invests in new products and services.

BoE Interest Rate Decision

The Bank of England (BoE) is scheduled to meet to discuss interest rates on Thursday. Economists are widely expecting the BoE to keep interest rates at 5.25%.

The BoE kept rates on hold at its last meeting in September, pausing the monetary policy tightening cycle that began in December 2021.

ING said in its preview that they “expect the Bank of England to keep rates on hold for a second consecutive month.”

“Inflation is still too high, but we expect more progress over coming months, and that should enable some gradual rate cuts from summer next year,” they wrote, adding that they expect the message to be “higher for longer.”

UK Mortgage Approval and Mortgage Lending Data

UK mortgage approval and mortgage lending data are expected on Monday. This data will provide insights into the lagging UK housing market.

Economists are expecting mortgage approvals to edge lower to around 45k after hitting 45.35k previously. Mortgage lending is expected to come in at £1.218bn.

A decline in mortgage approvals and mortgage lending would be a sign that the UK housing market is continuing to cool. Earlier this week, Lloyds, the UK’s largest mortgage lender, said it expects UK house prices to fall this year and next before rising in 2025.

Housing website Rightmove said earlier this month that it has seen the lowest October asking price increase since 2008 and “significantly below the average increase.”

By James Fyeman