FTSE 100 futures pointed to a cautious open on Tuesday after the index slipped more than 2% from this week’s high. Investors were also reacting to a softer pound and a hotter-than-expected UK consumer price reading, while positioning ahead of quarterly results from BP and Barclays.

Futures point to a cautious open

FTSE 100 futures were trading lower in pre-market deals on Tuesday, indicating a negative start for the cash index when London opened. The slide follows three straight days of declines that left the benchmark more than 2% off this week’s high, a pullback traders attributed to a mix of geopolitical risk, rising energy prices and the recent inflation surprise.

The near-term picture is dominated by corporate reporting. BP and Barclays are among the first heavyweight names scheduled to publish results, and investors are trimming exposure ahead of both companies’ updates. Cyclical, earnings-sensitive stocks have been hit hardest during the pullback, while energy and mining names have been more resilient.

Currency slide and bond reaction

The pound traded weaker in early moves, extending a recent downtrend and marking its weakest weekly stretch since January, according to currency commentary. A softer pound can boost reported sterling earnings for multinational exporters but also raises import costs and can weigh on domestically focused firms.

UK government bond yields rose after the release of March consumer price index data showing annual inflation stronger than expected. The hotter-than-expected CPI print reduced expectations of imminent Bank of England rate cuts, and gilts repriced to higher yields.

Commodities and geopolitics still driving sector moves

  • Energy and mining shares have carried weight in the FTSE, helped by renewed pressure on global supplies.
  • BP and Shell have traded near recent highs as crude and natural gas prices bounced on concerns around shipping and supply disruption linked to tensions in the Gulf.
  • Aviation-related names have been among the weakest, with aircraft engine and airline stocks falling amid reports of jet-fuel shortages and an expected slowdown in flying activity. Rolls-Royce and IAG were noted as laggards earlier in the week, and some consumer-facing groups with weak results also underperformed.

Earnings calendar tightens focus

  • BP’s results will give investors visibility on the boost from oil and refining margins and on cash flow trends at one of the FTSE’s largest constituents.
  • Barclays’ numbers will offer a read on loan demand, net interest income and performance across investment and retail divisions — a proxy for whether banks can offset margin pressure amid the shifting interest-rate outlook.
  • Both reports are likely to set the tone for the wider reporting season as firms including Lloyds, NatWest, GlaxoSmithKline and AstraZeneca are due to publish in the coming days.

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BP and Barclays’ results will be the first hard data for markets this reporting season and are likely to set the tone for firms including Lloyds, NatWest, GlaxoSmithKline and AstraZeneca, which are due to publish in the coming days.

This article was created with AI assistance.