“The FTSE 100 faltered on Monday morning after mixed trading in Asia overnight linked to a further crackdown by China on its technology sector,” says AJ Bell Financial Analyst Danni Hewson.
“This set a downbeat tone to what could be a defining week for the markets as some of the biggest US companies report their second quarter earnings and the US Federal Reserve delivers its latest update on interest rates and financial stimulus.
“That meeting on Wednesday isn’t expected to see any rate increase but could see at least the suggestion of a tapering of support for the economy as the Fed weighs inflation risks.
“A second estimate of US GDP for the second quarter will also draw attention later in the week, while several big UK companies are set to report, including the banks.
“Expectations for the UK banking sector have been lifted in recent weeks by a strong showing from their American cousins and the decision to give them the green light to start paying dividends again. These heightened expectations could be tough to match.”
“Could a last minute rush rescue Ryanair’s year? While the summer has been heavily affected by the continued strict restrictions on travel throughout Europe, the company is seeing notably higher bookings both for late summer holiday bookings and the winter.
“This demonstrates how resilient demand for foreign holidays remains, particularly among the fully vaccinated cohort which now have a little more freedom to travel.
“If people are booking now given all the uncertainty and hassle involved in flying then you could imagine a more rapid ascent when, hopefully, we finally emerge from the pandemic.
“The company’s strong balance sheet means it has been able to absorb significant losses, which continue to mount, and should make it better place than some of its rivals to survive and then thrive when an element of normality returns to the aviation sector.
“It could be a meaningful participant in a further consolidation of an industry which feels pretty much inevitable given the financial strain many businesses are under thanks to their heavy fixed costs and a sudden drop in revenue.
“A big part of Ryanair’s future will be steered by its B737-8200 ‘Gamechanger’ fleet of aircraft. Given higher fuel efficiency and an increased number of seats, these could help Ryanair deal with the long-term challenge posed by increasing awareness among the public and governments of the need to reduce carbon emissions.”
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