Investors focus on Wall Street earnings and US interest rates

Investors face another testing week as Wall Street prepares for earnings updates from Apple, Tesla and Microsoft among other heavyweights in the coming days.

The Federal Reserve’s latest meeting on Wednesday also has the potential to pressure markets amid fears that policymakers may signal plans to accelerate interest rate rises.

Investors are also watching developments in Ukraine after the US told relatives of embassy staff to leave the country amid fears of an invasion by Russia. The geopolitical tensions contributed to Brent crude rising above $88 a barrel today.

Bitcoin price continues to fall

08:49 , Graeme Evans

Pressure on bitcoin continued over the weekend, with the cryptocurrency now trading at below $35,000.

Having reached an all-time high of over $68,000 just two months ago, bitcoin has suffered along with other risk assets as the Federal Reserve readies itself to start tightening monetary policy by hiking interest rates.

The slump, which includes a fall of 3% today, is a blow to investors who thought bitcoin might provide a hedge against inflation.

Unilever and Vodafone shares surge, De La Rue slides

08:31 , Graeme Evans

The FTSE 100 index is 7.79 points lower at 7486.34, with housebuilders and tech-based stocks under pressure amid declines of 3% for Barratt Developments and Scottish Mortgage Investment Trust.

Unilever posted the biggest gain, up 5% or 195.5p to 3870p after it emerged that activist investor Nelson Peltz’s Trian fund has built a stake in the consumer goods giant.

Vodafone also rose 3% on speculation that it held talks to buy rival 3 from its Hong Kong-based owners. The consolidation talk helped BT shares lift 2.45p to 191.2p.

The FTSE 250 index was 104.24 points lower at 22,159, with Trustpilot the biggest faller after a 3% decline. Computacenter improved 2% as its latest upgrade to guidance left it on course to deliver the IT firm’s 17th year of uninterrupted earnings per share growth.

De La Rue shares skidded 29% in the FTSE All-Share after the bank note printer revealed that supply chain inflation, staff shortages and the computer chip drought will mean a shortfall in profits.

Story continues

Aviva Investors issues sustainability warning

08:04 , Graeme Evans

Aviva Investors today warned that it will vote against the re-election of directors where companies fail to meet expectations on climate change, biodiversity and human rights.

The £262 billion asset manager has written to 1500 companies in around 30 countries setting out its sustainability expectations in 2022.

Chief executive Mark Versey said: “Companies must now turn their pledges into concrete and measurable plans of delivery.

“Our letter sets out clear expectations as to how they should do this, and what those plans must address across climate impact, biodiversity and human rights.”

Aviva Investors said it will hold boards and individual directors accountable where the pace of change does not exhibit sufficient urgency. The asset manager also wants executive compensation structures and performance targets to reflect sustainability goals.

In 2021, Aviva Investors voted against the re-election of directors at 137 companies for lack of progress on ethnic diversity and opposed directors at 85 companies due to human rights concerns.

The firm also rejected 33% and 68% of executive pay proposals in the UK and US, respectively, on concerns over quantum and structure.

The asset manager said it will divest stakes in cases where companies consistently fail to meet its requirements.

Last year, Aviva Investors introduced a 1.5 degree centigrade aligned engagement programme focused on 30 of the world’s worst carbon emitters, with an ultimate sanction of divestment if its expectations are not met over one to three years.

FTSE 100 tracks Wall Street lower

07:40 , Graeme Evans

European markets are set for a poor start to the week as they track the falls seen on Wall Street on Friday.

The Nasdaq posted its lowest weekly close since June last year and its worst weekly loss since February 2020, with the S&P 500 also below its 200-day moving average.

Michael Hewson of CMC Markets said the falls reflected deepening concerns about recent price surges becoming entrenched and the propsect of faster-than-expected tightening of monetary policy by the US Federal Reserve.

China’s determination to pursue a zero-Covid policy has also created the potential for much higher prices in the medium and longer term. And the geopolitical backdrop caused by escalating tensions on the Russia and Ukraine border has added to the jitters.

Hewson said: “For several years, the markets have become accustomed to buying the dips no matter the fundamental backdrop.

“However recent events appear to be seeing a significant loss of confidence in this mindset, and while European markets haven’t seen the levels of selling pressure, the ability to move higher has been tempered by the weakness being seen in the US.”

To add to the inflationary pressures, the geopolitical tensions and ongoing production issues for some OPEC+ countries mean Brent crude is back above $88 a barrel after rising 0.5% overnight.

CMC has forecast that the FTSE 100 index will open 24 points lower at 7470.