FTSE 100 shares to watch next week: BP, HSBC, BAE, Rolls-Royce

The FTSE 100 index has been under pressure this week as concerns about earnings escalated. It dropped to its lowest point in three weeks as American indices like the S&P 500 and Nasdaq 100 sunk.

The index reacted to numerous earnings report this week. Telecom giants like Vodafone and BT Group published their results on Thursday. Lloyds was the first major bank to publish its earnings. Other top FTSE 100 companies that released their results this week were AstraZeneca and Unilever. 

Rolls-Royce share price has slipped

Rolls-Royce Holdings will be one of the top FTSE 100 index companies to watch next week as it publishes its financial results on Thursday. These numbers will be important because its stock has moved into a correction as it dropped by over 11% from its highest point this year.

Despite this pullback, Rolls-Royce has been one of the top FTSE 100 index engines since 2020. It has risen by over 1,200% from its lowest point since March 2020 and is also one of the best performers this year. 

The upcoming half-year results will provide more color about whether the company is achieving its ambitious targets. It hopes to achieve an annual operating profit of between £2.5 billion and £2.8 billion by 2027 and operating margins of between 13 and 15% in that period. 

Rolls-Royce’s key challenge is that companies like Boeing and Airbus are not producing at a faster pace as expected. Airbus slashed its forward production guidance because of parts shortages while Boeing is still going through internal challenges.

At the same time, many airlines have slashed their earnings guidance, a move that could impact Rolls-Royce. While RR is an engine manufacturer, it makes most of its money from airlines through long-term servicing contracts.

BAE Systems earnings ahead

The other top FTSE 100 index company to watch will be BAE Systems whose stock has tumbled by 12% as I had predicted. 

Like Rolls-Royce, BAE has been a key growth engine for the Footsie as it soared by 257% from its lowest swing in 2020. The company has benefited from the ongoing war in Ukraine, growing tensions in the Middle East, and the geopolitical issues between the US and China. 

These events have led to a high backlog, which jumped to a record high of over £70 billion and this trend could continue. Therefore, Thursday’s results will provide more colour about the pace of backlog growth and its margins.

A key challenge for BAE Systems and other companies in the military industrial complex has been how to grow their profits and expand their margins.

HSBC earnings ahead

The other top FTSE 100 index component to watch next week will be HSBC, the biggest European bank by assets. Like Rolls-Royce and BAE Systems, the HSBC share price has dropped for seven consecutive weeks and is down by almost 9% from its highest point this year.

The results will come a few months after Noel Quinn caught the market by surprise by resigning. He will be replaced by Georges Elhedery, who will become CEO on September 2nd. 

The numbers will also show whether HSBC’s turnaround efforts are leading to improved profitability. The most recent results showed that its profit before tax dropped to $12.7 billion in the first quarter. These numbers included its $4.8 billion gain of its disposal of HSBC China and a $1.1 billion impairment for its Argentina business. 

BP earnings ahead

Meanwhile, BP, the second-biggest energy company in the FTSE 100 index will release its earnings. These numbers will likely show stability because of the recent oil and gas performance. 

Brent and West Texas Intermediate (WTI) benchmarks have remained steady above $80 in the past few months. As such, BP will likely publish strong financial results next week.

Technically, as shown above, the BP share price has formed a rectangle pattern whose upper and lower sides are at 541p and 435p. This pattern can be seen as being a bullish flag pattern, meaning that it will likely bounce back later this year.

Rio Tinto earnings

Rio Tinto will be a core part of the FTSE 100 index to watch next week as it publishes its results. Like most names in this list, its stock has dropped by about 15% from its highest level this year. This price action happened as most commodity prices pulled back amid renewed risks of China’s economic growth. 

The company also pulled back amid rumours that it was considering acquiring Teck Resources, a large Canadian mining company. These results will likely give it a chance to confirm or deny these rumours. 

The other top FTSE 100 companies to watch next week will be Schroders, London Stock Exchange, Mondi, International Consolidated Airline (IAG), Standard Chartered, St. James Place, and Fresnillo.