Bank of England rate cut boost short-lived as pressure builds on Apple and Amazon to deliver

“London markets finally got the rate cut they’ve been anticpating from the Bank of England, only to end up back in the same old expectation cycle,” says AJ Bell head of Financial Analysis Danni Hewson.

“Whilst shares on the more domestically-focused FTSE 250 enjoyed an initial bang the noise was muted somewhat as Bank governor Andrew Bailey sought to maintain a catious stance. There are those in the City who feel that caution has already cost the country with the Bank acting too slowly to raise rates and allowing inflation to boil. But whilst markets think there is likely to be at least one more cut this year, most are betting September’s meeting will herald a stick rather than a twist.

“It was no surprise to find shares in banks like NatWest, HSBC and Lloyds coming under pressure, or conversely to see housebuilders, real estate and even B&Q owner Kingfisher enjoying an upbeat day. Banks benefitted from the increased cost of borrowing and competition in the mortgage market has already pushed lenders to bring down rates to capture what is expected to be a burgeoning market as those who had been waiting to step onto or up the ladder could now make their move.

“Every rate move has consequences and the pound lost ground against both the dollar and the euro as money markets priced in the changing rate landscape and attempted to map out the path for the rest of the year.”

Apple / Amazon

“Whilst July might be safely in the rear-view mirror, investors are bracing themselves for more volatility.

“Concerns about AI spend versus reward helped knock the Nasdaq which was down more than one and a half percent over the month. Both Apple and Amazon report after the bell and anything less than spectacular hasn’t been cutting it this earnings season, though Meta managed to bring home the bacon after lifting guidance and demonstrating that it’s putting its increased capex to work.

“For Apple investors it’s going to be all about the next generation of iPhone. How can the company persuade people they don’t just fancy a new handset, but that they simply must have one? If Apple can convince investors that the next ‘super cycle’ is around the corner that should be more than enough to offset the current iPhone sales decline and concerns about Chinese consumers.”

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