FTSE 100 Live: IMF updates economic forecasts, US earnings season picks up pace

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(Evening Standard)

The IMF’s world economic outlook and earnings updates from more major US companies will provide the main focus for investors today.

US markets experienced a mixed session yesterday as the World Bank cut its 2022 growth estimate to 3.2% but figures from China revealed a better-than-expected first quarter GDP figure. The IMF is due to publish updated forecasts in Washington later.

Oil prices, meanwhile, are at their highest levels in almost a month after production disruption at Libya’s biggest oil field added to ongoing supply issues.

Miners 2% higher, Pearson falls 3% after contract blow

08:36 , Graeme Evans

The FTSE 100 index was 19.85 points lower at 7596, with commodity-focused stocks propping up the top flight after gains of 2% for miners Antofagasta, Glencore and Anglo American and rises of 1% for BP and Shell.

Pearson posted the biggest fall in the FTSE 100, declining 3% or 18.4p to 753.6p, after the education publisher announced that its decade old online learning partnership with Arizona State University will end next year.

Pearson said the profit impact of the contract termination will be modest in 2022 and 2023 and that there was no change to its financial guidance for this year.

The IMF’s latest economic forecasts are due at 2pm today, while updates this week from Netflix, Tesla, Johnson & Johnson and Procter & Gamble will test market confidence.

Richard Hunter, head of markets at Interactive Investor, said: “The limited number of releases so far has yet to establish a meaningful trend, with the banks reporting slightly disappointing earnings and a cautiously negative outlook.

“On the other hand, the airlines have so far beaten expectations with stronger forward guidance indicating that travel demand is well on the way to recovery for the imminent summer season.”

The FTSE 250 index was 181 points lower at 20,940, with travel-focused stocks including Wizz Air and TUI losing some of their gains from before the weekend.

Catering downgrade hits SSP shares

08:19 , Graeme Evans

Shares in food travel business SSP, whose brands include Upper Crust and Camden Food Co, are under pressure after being downgraded by a City bank.

The FTSE 250-listed stock fell 5% or 12.6p to 232p as Deutsche Bank removed its “buy” recommendation and lowered its price target from 333p to 265p.

The downgrade formed part of a wider review of the European catering sector, whose recovery from Covid has been hampered by rising energy, food costs and wages.

Deutsche Bank’s note said: “Our economists now believe that the only way to lower inflation will be through aggressive interest rate hikes in the second half of 2022 and 2023, which we believe could trigger a recession at the end of 2023 or early 2024.”

FTSE 100 flat, Brent crude at $113 a barrel

07:46 , Graeme Evans

Economic worries will hang over markets today after the World Bank cut its growth forecast for this year and China’s latest data release painted a mixed picture.

Against a backdrop of continuing Covid lockdowns, Beijing reported March retail sales below expectations but first quarter GDP ahead of hopes at 4.8%.

The World Bank added to Wall Street jitters by lowering its 2022 growth forecast from 4.1% to 3.2% after the Ukraine war heightened commodity price pressures.

Oil prices, meanwhile, show no signs of easing after Brent crude futures pushed up to their highest levels in almost a month at $113 a barrel after disruption at production facilities in Libya.

US markets closed in negative territory last night while the FTSE 100 index is forecast to open unchanged at 7,616. Frankfurt’s DAX is seen opening 73 points lower at 14,090, according to CMC Markets.

As well as the economic outlook, attention will be on the US earnings season as Johnson & Johnson is due to report before the opening bell and Netflix and IBM after the market closes.