FTSE lower, markets await US inflation & China growth numbers, Wall Street earnings season in focus, and Wizz Air loses money again

“After a tumultuous start to 2022 the past month or so has seen global markets largely in limbo as investors seek to make judgements about whether any sort of soft landing for the economy can be engineered while still bringing prices under control,” says AJ Bell Investment Analyst Danni Hewson.

“This week sees three catalysts which could shake investors out of their torpor as we get the latest reading of US inflation, GDP figures from China and the big US banks kick-off the second quarter earnings season across the Atlantic.

“There will be plenty of clue hunting going on as we await the latest decision from the US Federal Reserve at the end of this month. The key question is whether Jerome Powell and his colleagues will double up with another 75 basis points rise or if they’ll ease off to avoid the medicine for rampant inflation proving worse than the disease.

“The FTSE 100’s outperformance compared to other global markets has started to falter as the commodity stocks that helped support its relative strength begin to run out of steam.

“Metals prices had already turned and energy markets are starting to struggle too as attention turns to the pressures on demand now the initial supply shock associated with Russia’s invasion of Ukraine has begun to abate. Miners helped drag the FTSE 100 lower on Monday morning as a result.

“In this context the latest Chinese growth figures will be closely watched, given it is one of the most commodity-hungry economies in the world, with the impact of Covid restrictions in particular focus.”

Wizz Air

“Despite its best efforts to aggressively grow its position in the low-cost airline market, Wizz Air’s latest trading update doesn’t paint a picture of a company flying high.

“While aircraft capacity is up compared with the period just before the pandemic, the percentage of bums on available seats has fallen.

“Wizz Air’s ticket fares were down in the quarter and there has been a big jump in fuel costs. All in all, the airline was loss-making in its first quarter, meaning the considerable effort put into making it a winner in the industry hasn’t actually generated any extra money in its pocket.

“Ever the optimist, Wizz Air sees a much better second quarter, predicting that ticket prices will be higher, more people will be travelling, and non-fuel costs will ease back. However, like many other airlines, Wizz Air is reducing its capacity this summer to ease pressures on airports.

“There isn’t much else that Wizz Air can do beyond entering a price war to help fill its planes to maximum capacity. That seems unlikely given the trend across the sector is for air fares to go up.”

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