Top 4 catalysts for the FTSE 100 Index this week

The FTSE 100 Index has held steady in the past few days, reaching its highest point since July 8. It has jumped by nearly 10% from its lowest point in March this year. This article highlights some of the top catalysts for the Footsie Index this week.

FTSE 100 Index to react to US-Iran war

One key catalyst for the Footsie Index this week will be the ongoing US-Iran crisis, which has continued to escalate. Tens of people have been killed in Iran, while two US service members died in Jordan. 

Worse, there are concerns that this is becoming a new forever war as talks have failed to generate any meaningful results. As a result, there is a likelihood that energy prices will continue rising as the Strait of Hormuz closure continues.

FTSE 100 Index constituents react differently to the US-Iran war. For one, IAG and Rolls-Royce stocks will likely come under pressure as Iran has warned that it will hit key airports in the region if the US continues targeting its critical infrastructure.

On the other hand, energy companies like Shell and BP will likely continue bouncing back as oil prices soar. Shell has jumped by 13% from its lowest point this month, while BP has soared by 15%.

UK inflation, jobs, and retail sales data

The FTSE 100 Index will also react to some important macro data from the UK this week. These are important numbers because they will provide more hints on what the Bank of England (BoE) will do.

Economists expect the upcoming numbers to show that the unemployment rate remained at 4.9% in May. With energy prices falling in June, the expectation is that the headline CPI dropped from 2.8% in May to 2.7% YoY in June. The core CPI is also expected to drop from 2.6% to 2.5% YoY.

While this retreat will be encouraging, the main risk is that the US-Iran war has resumed and energy prices are starting to climb. If the war continues for a while, there is a risk that inflation will remain stubbornly above the 2% target.

The UK will also publish the latest retail sales numbers on Friday. These numbers come at a time when odds of a Bank of England rate hike have risen to 38% on Polymarket.

Andy Burnham becomes UK Prime Minister

The other key driver for the FTSE 100 Index this week is political as Andy Burnham is set to become the new Prime Minister on Monday. He has already become the new Labour Party leader.

There are hints that Burnham will appoint Shabana Mahmood to be the next Chancellor. Shabana is widely seen as being a more market-friendly leader than Ed Miliband, who was also under consideration.

Traders will focus on more announcements from the new prime minister on how to boost the economic growth and the financial market.

US and UK earnings season

Finally, the FTSE 100 Index will also react to the continuing US and UK earnings season. Hundreds of US companies will publish their numbers, with the most notable ones being Tesla, Google, Charles Schwab, Chubb, GM, and GE Vernova. Historically, US earnings tend to have an important impact on UK equities.

In the UK, BT Group, a major telecom company, will publish its financial results, showing how its turnaround is continuing. Compass Group, a top company in the food services industry will also release its numbers.