May 30, 2024
Stock Market

Next week’s stock market outlook for FTSE 100 and FTSE 250 shares

  • The outlook for 2024 is in focus for several UK Banks
  • Demand for BAE Systems’ products is likely to remain robust
  • AI investment will be in the spotlight at WPP


What to expect from a selection of FTSE 100, FTSE 250 and selected other companies reporting next week.

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Among those currently scheduled to release results next week:

*Events on which we will be updating investors.

UK Banks

Matt Britzman, Equity Analyst

Several of the biggest UK banks report fourth-quarter results next week and there are a few main themes running across the sector. Loan default levels and impairment charges will be key for investors. Until now, consumers and corporations have remained relatively resilient to broader economic pressures. The levels of defaults on loans have been staying in line with pre-pandemic levels.

Net interest margin trends and the outlook for 2024 will be important to watch. We’re hoping to see a slowdown in customers shifting to higher rate and longer-term savings accounts, which would be welcome news for the banks. There could also be some positive news on mortgage lending, where we expect conditions to improve over the year.

Read here for commentary on the individual banks

BAE Systems

Aarin Chiekrie, Equity Analyst

BAE Systems occupies a key space in the defence market. Given the elevated threat environment, we’re expecting to hear that demand for BAE’s products and services has remained strong when the group announces full-year results next week. Markets are expecting full-year revenue to grow 6% to £24.6bn, in line with the group’s prior 5-7% guidance.

We’ll also be hoping to hear how the group’s $5.55bn acquisition of Ball Aerospace is progressing. The deal should be settled in the first half of the year, and we’re cautiously optimistic that the combination of expertise and technology will be a good fit, although nothing is guaranteed. Despite taking on new debt to fund the acquisition, the balance sheet’s likely to remain in good health. However, we’ll be keeping an eye out for any updates to the group’s shareholder return plans, with the Ball Aerospace deal likely to put some pressure on cash resources in the near to medium term.

The author holds shares in BAE Systems.

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Sophie Lund-Yates, Lead Equity Analyst

Media and advertising giant WPP expects to post full year net-revenue growth of 0.9%, with operating margins in the region of 15%. That’s at the top end of guidance, and given how recently the update landed, we’re optimistic the group will come good on these plans.

Market moves are more likely to be governed by WPP’s commentary on AI. The rapid changes in technology present huge opportunity, but also risk to the group. There are plans to invest £250mn a year in data and technology, and we suspect the market would like a bit more detail on exactly how that will be spent.

More broadly, the group’s being stung by lower spending in tech and creaking economic activity in China which affects how much is being spent on marketing, and therefore the amount hitting WPP’s bank account. We’d like some further steer on how the global advertising landscape is shaping up for 2024.

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Unless otherwise stated estimates are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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