London pre-open: Stocks to rise as investors eye US bank earnings

12th Jul 2024 07:24

(Sharecast News) - London stocks were set to rise at the open on Friday as investors turned their focus to the US, where banks are due to kick off the earnings season.

The FTSE 100 was called to open around 16 points higher.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Today, attention shifts to earnings. The US big banks will open the dance today. Shares of big US big banks outperformed the S&P500 this year.

"But the Q2 results may look mixed as the interest rate environment wasn't favourable due to rise in yields, the net interest income may have remained limited due to sluggish loan growth, the non-interest revenues were probably mixed due to slowing economic activity and credit is a place to watch given the fears around the commercial real estate but investors could look past the rate-related worries as the Fed is now expected to announce the first rate cut as early as September and cut three times before the year ends."

On the macro front, there were no UK releases of note due, but the US producer price index for June is scheduled for release at 1330 BST, while Michigan consumer sentiment is at 1500 BST.

Corporate news was scarce, but Ashmore said in a fourth-quarter statement that assets under management fell by $2.4bn over the period. This comprised negative investment performance of $0.4bn and net outflows of $2bn, .

"Emerging markets returns have been positive over the past year and Ashmore has delivered outperformance across a broad range of strategies, but in contrast to this point in previous cycles, investor risk appetite remains subdued and institutional decisions to reduce emerging markets exposure continue to drive net outflows," it said.

"This trend was notable in the blended debt theme this quarter, which, combined with small net outflows from corporate debt and equities, exceeded the net inflows into the local currency and external debt themes."