After a strong start to the year for UK stocks amid better-than-expected corporate results from retailers and signs of falling inflation, the FTSE 100 has taken a breather over the past few days.
Importantly for investors, the FTSE hasn’t given up the year-to-date gains, merely staying firm, with investors waiting for the next nuggets of information on inflation and interest rate expectations before plotting their next move.
Russ Mould, investment director at AJ Bell, said: “It’s a similar situation in the US where the S&P 500 enjoyed a jump in the first two weeks of the year and has now lost momentum.
“Plenty of big-name companies on the US stock market will report earnings over the next few weeks and a lot of investors may want to see if they meet, exceed or miss expectations before shifting their portfolios.
“Given the difficult backdrop, there is fear among some parts of the institutional investment market that US earnings forecasts might still be too high for 2023 and that stocks across the pond might not be able to sustain their current strength.
“Figures from Procter & Gamble on Thursday, Schlumberger on Friday, Microsoft and Johnson & Johnson next Tuesday, and Tesla and ASML next Wednesday will certainly be ones to watch as their fortunes could have a major influence on market sentiment.”