The FTSE 100 Index wavered this week even after the Bank of England (BoE) slashed interest rates by 0.25% and the US reached a trade deal with the United Kingdom (UK) on Thursday. 

After initially peaking at £8,637 on Tuesday, the index has pulled back to £8,530. This article looks at some of the top FTSE 100 shares to watch next week as they publish their financial results.

Compass Group (CPG)

Compass Group is a top British company in the food services industry with a market cap of over £44.58 billion. It offers its services to schools, colleges, mining facilities, hospitals, and sports venues. 

Compass Group will be in the spotlight as it publishes its trading statement on Wednesday next week. These numbers comes at a time when the Compass Group stock price has jumped to 2,610p, up by 11.3% from its lowest level this year. 

These numbers will provide more information about its business and whether its growth momentum has continued. It made over $42 billion in 2024, up by 10.8% in 2023, while its operating profit jumped by 11.7% to $2.58 billion. 

The management guided its annual operating profit growth to a high single-digit level, and its revenue growth came in at 7.5%. 

Burberry (BRBY)

Burberry is a top British company in the luxury goods market, where it competes with other European brands like Hermes, LVMH, and Kering. It is no longer a member of the FTSE 100 Index after its stock collapsed from 2,447p in 2023 to 556p last year. 

Burberry share price has attempted to bounce back, rising in the last three consecutive weeks and moving to the highest level since March. 

The upcoming earnings on Wednesday will provide more data on whether its business has started to stabilize. Its most recent trading statement showed that its retail revenue dropped by 7% in the fourth quarter to £659 million. Comparable store sales dropped by 4%, while its Chinese revenue fell by 7%. 

The Burberry share price will likely do well if it demonstrates that the Chinese revenue is falling at a slower rate. 

Read more: Burberry’s turnaround plan: what to make of shares jumping 22% despite losses?

Aviva (AV)

Aviva share price has done well in the past few years as its turnaround efforts have worked. Most recently, the stock has risen for five consecutive weeks and is hovering at its all-time high. It has jumped by over 33% this year, making it one of the top performers in the FTSE 100 Index. 

Aviva stock’s rally continued after it revealed plans to buy Direct Line, its smaller rival, as it seeks to grow its market share in the motor insurance industry. It will also shed over 2,300 jobs in a bid to cut costs. 

Aviva shares will be in the spotlight next week as it publishes its financial results. The most recent numbers showed that its annual operating profit jumped to £1.7 billion, a big increase from the £1.46 billion it made a year. 

National Grid (NG)

The National Grid share price has retreated in the past three weeks. It has moved from a high of 1,102p in April to the current 1,055p. It remains about 35% from its lowest level in 2024. 

The most recent numbers showed that National Grid’s business came under pressure in the last six months. Its operating profit dropped by 34% to £1.39 billion, while the profit before tax fell by 50% to £684 million.

The most notable National Grid news was that the company raised £7 billion rights issue as it seeks to deliver its five-year £60 billion investment plan.

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The US dollar appeared set to close the week with gains against most of its major counterparts on Friday, as a newly announced trade agreement between the United States and the United Kingdom fanned hopes for potential progress in the highly anticipated US-China trade negotiations scheduled for the weekend.

Simultaneously, diminishing expectations for imminent US interest rate cuts, following cautious remarks from the Federal Reserve, provided further support for the greenback.

Financial markets headed into the weekend with all eyes firmly fixed on the upcoming trade talks between Washington and Beijing, slated to begin Saturday in Switzerland.

The euro remained steady during Asian trading hours but was down approximately 0.6% for the week at $1.1217.

The Japanese yen also weakened against the dollar by about 0.7% over the week, touching a one-month low of 146.18 before stabilizing around 145.78.

Sterling, which had initially rallied on reports of an impending US-UK trade deal, relinquished those gains after the specifics of the agreement revealed a relatively limited scope.

The deal modestly expands agricultural access for both nations and lowers some prohibitive US duties on British car exports, but notably leaves the 10% baseline tariff in place.

The pound subsequently hit a three-week low of $1.3220 in early Friday trading.

Market analysts interpreted the dollar’s strength as a reflection of cautious optimism regarding broader trade resolutions.

“The market reaction of buying USD may reflect greater optimism that such tariff deals are doable,” noted Steve Englander, global head of G10 currency research at Standard Chartered, in a client note.

He added, “Trump’s dangling of the prospect of a trade détente with China may be adding to optimism that the global disruption from trade wars may not be as severe as markets have feared… For the time being, G10 markets would be relieved if US and China bilateral tariffs were rolled back, even if they remain well above January 19 levels.”

Reflecting a refreshed, albeit selective, appetite for risk, Bitcoin also saw a notable surge, pushing back above the $100,000 mark.

Focus on US-China dialogue

President Trump, while announcing the UK deal, stated he expects “substantive negotiations” between the US and China this weekend and indicated that the current high tariffs on Beijing (reportedly up to 145%) would likely be reduced.

Adding to the speculative buzz, the New York Post reported, citing unidentified sources, that the administration is considering a plan to slash tariffs on Chinese imports by more than half, though the White House dismissed this as mere speculation.

Central bank divergence and Fed’s cautious stance

Central bank actions this week were largely in line with expectations.

The Bank of England proceeded with an anticipated rate cut, while central banks in Sweden, Norway, and the United States opted to keep their policy rates on hold.

However, comments from Federal Reserve Chair Jerome Powell, particularly his emphasis on the prevailing level of economic uncertainty, significantly tempered market expectations for near-term US rate cuts.

Consequently, market pricing for a Fed rate cut in June has receded sharply, falling to around 17% from approximately 55% just a week ago.

This recalibration of Fed expectations has been a key factor underpinning the dollar’s recent strength.

Asian currency dynamics and other market moves

In contrast to its performance against G10 peers, the dollar registered declines against several Asian currencies this week, largely influenced by a surprising surge in the Taiwan dollar, which settled around 30 to the dollar after a volatile period, marking a gain of over 6% since the end of April.

The Singapore dollar also traded near decade highs.

The Hong Kong dollar, however, retreated from the strong end of its trading band following significant intervention by the Hong Kong Monetary Authority.

The Australian dollar was on track for its first weekly drop in a month, down 0.7% to $0.6391, with the New Zealand dollar also trading lower at $0.5892.

As the week draws to a close, the focus remains squarely on the high-stakes trade discussions in Switzerland, which have the potential to significantly shape market direction in the coming weeks.

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The intensifying tensions between nuclear powers India and Pakistan pose a significant risk of widespread and severe humanitarian consequences for the region.

Escalating tensions highlight the critical need for emergency preparedness in the energy sector. A protracted conflict would significantly threaten both nations’ capacity to satisfy their energy demands, according to Rystad Energy.

The Indian army reported that Pakistan’s armed forces initiated “multiple attacks” involving drones and other munitions across India’s entire western border on Thursday night and early Friday, escalating the conflict between the two nuclear-armed nations.

Energy security

There is a significant disparity between India and Pakistan’s strategic petroleum reserves. 

In terms of daily crude demand, India consumes 5.40 million barrels per day (bpd) compared to Pakistan’s 0.25 million bpd, according to Rystad Energy analysis.

India maintains a strategic petroleum reserve of 39 million barrels, with 21.4 million barrels currently in stock. Pakistan, conversely, does not possess any strategic oil reserves, which could expose the country to supply vulnerabilities.

India’s commercial stockpiles are close to 160 million barrels.

“However, the discrepancy goes beyond just demand—India’s strategic and commercial reserves can sustain supply for over a month (33 days), while Pakistan, which lacks any strategic reserves, has only 20 days’ worth in stock,” Rohan Goindi, senior analyst, commodities markets, oil at Rystad Energy said in an emailed commentary.

India, the world’s third-largest crude importer, depends heavily on foreign sources for its oil needs, with approximately 85% of its demand met through imports. 

Similarly, Pakistan imports around 78% of the crude oil required to meet its domestic demand.

Fortunately, refineries in both India and Pakistan are situated outside the conflict zone, mitigating the risk of operational disruptions, Rystad said. 

Additionally, the lack of refineries and LNG terminals in the affected areas suggests that crude oil and LNG imports are unlikely to be directly impacted.

However, a notable difference exists in the level of emergency preparedness between the two nations, which raises concerns, the Norway-based energy intelligence company said.

Water treaty suspension

India has intensified pressure beyond military action through significant diplomatic and infrastructure moves. 

These include suspending the Indus Waters Treaty, expelling Pakistani diplomats, and accelerating five hydroelectric projects in Jammu & Kashmir with over 4,000 MW capacity. 

The hydroelectric projects, previously hindered by treaty-related issues, can now proceed more quickly due to the suspension of procedural obstacles. 

The potential suspension of a long-standing water-sharing treaty poses a significant threat to Pakistan’s energy sector, as 90% of its installed hydropower capacity relies on this agreement, according to Rystad.

The Indus Water Treaty is crucial for both India and Pakistan. 

India has 2.7 GW of hydropower projects relying on rivers covered by the water treaty, which is part of its total installed hydropower capacity of 52 GW nationwide.

Disruption to these projects will have a relatively small impact in India as hydropower only contributed 8% to total power generation in 2024.

However, disruption to the water treaty could put up to 9.3 GW of hydropower capacity–equivalent to 90% of Pakistan’s total installed hydropower capacity–at risk, as per Rystad’s analysis.

Uttamarani Pati, analyst, renewables & power research at Rystad Energy said;

If the treaty were to be terminated altogether, India would gain full control of the Indus, Jhelum and Chenab rivers, enabling it to build more hydropower projects and potentially operate existing upstream facilities in ways that could adversely affect its downstream neighbor.

Suspension of water treaty more severe for Pakistan

According to Rystad, the suspension of the Indus Water Treaty will have a more severe impact on Pakistan than for India. 

“Reduced inflow from the Indus and Jhelum rivers will compromise Pakistan’s grid stability and ability to meet peak power demand, especially in the summer months, potentially leading to widespread blackouts.”

Terminating the Indus Waters Treaty (IWT) would allow India to control the Indus, Jhelum, and Chenab rivers, potentially enabling the construction of additional hydropower projects in the area, it further said.

India’s current upstream hydropower operations carry a potential risk of negatively affecting its downstream neighbor. 

This could occur through actions such as sediment flushing and unexpected releases of large volumes of reservoir water, which could lead to flooding.

Rystad noted:

However, no steps have been taken in this direction at present, and any international backlash from such unilateral actions could be significant.

In addition, escalating tensions threaten long-term green energy investments like Pakistan’s Thatta hydrogen project and could disrupt mature projects such as AM Green Ammonia’s Kakinada plant in India due to economic instability and supply chain issues.

Also, in anticipation of supply shocks, India could ramp up purchases of crude oil, which is likely to support prices in the short term.  

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Indian equity markets opened sharply lower on Friday, weighed down by investor concerns following a series of drone and missile attacks launched by Pakistan on the evening of May 8.

The benchmark BSE Sensex fell 765.80 points or 0.95% to 79,569.01, while the NSE Nifty50 Index dropped 245.20 points or 1.01% to 24,028.60 by 10:45 AM.

The sell-off came despite a continued flow of foreign institutional investments into the Indian equity market.

Analysts noted that the sudden rise in geopolitical tensions had injected short-term uncertainty into otherwise strong domestic and global fundamentals.

Defence ministry confirms drone, missile strikes along western border

According to the Ministry of Defence, Pakistan Armed Forces targeted military installations using drones and other munitions along the Western border and carried out multiple ceasefire violations (CFVs) along the Line of Control in Jammu and Kashmir.

Key military stations including Jammu, Pathankot, and Udhampur came under attack from Pakistani-origin drones and missiles.

However, all threats were neutralised without any casualties or material loss, with the Indian response deploying both kinetic and non-kinetic countermeasures in line with standard operating procedures.

However, it has marked a significant escalation in tensions between the two nations.

Broader markets reel, but defence stocks gain ground

Across the board, sectoral indices were under pressure.

Nifty Bank, FMCG, Media, Metal, and Realty indices declined by 1–2%.

Mid and small-cap indices were not spared either, with the Nifty Midcap100 falling 1% and the Smallcap100 shedding 2%.

However, defence-related stocks saw sharp gains, driven by expectations of increased defence spending and faster order execution.

Shares of Bharat Electronics surged 3.41%, Bharat Dynamics gained 3.31%, and Astra Microwave climbed 3.21%.

Other gainers included Hindustan Aeronautics (2.34%), Paras Defence (2.08%), and Mazagon Dock Shipbuilders (1.56%).

“The attack has drawn attention to the defence sector’s strategic importance. With large order books already in place, these companies could benefit from accelerated execution timelines,” said Dr. Vikas Gupta, CEO of OmniScience Capital.

“That said, investors should remain cautious and invest based on valuation and scientific frameworks.”

Why market reaction is still subdued?

Despite the short-term decline, analysts remain optimistic about the broader outlook for Indian markets.

They pointed out that foreign institutional investors (FIIs) are continuing to invest in Indian equities, reflecting their sustained confidence in the country’s long-term economic growth prospects, even amid rising geopolitical tensions.

FIIs have poured in over Rs 47,000 crore ($5.5 billion) into Indian equities over the past 16 sessions.

This marks one of the longest buying streaks since December 2020 and underscores investor confidence in India’s long-term growth trajectory.

“Under normal circumstances, on a day like this, the market would have suffered deep cuts. But this is unlikely due to two reasons. One, the conflict, so far, has demonstrated India’s clear superiority in conventional warfare, and therefore, further escalation of the conflict will inflict huge damage to Pakistan. Two, the market is inherently resilient, supported by global and domestic macros. Weak dollar and potentially weakening US and Chinese economies are good for the Indian market,” said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

Vijayakumar added that the domestic macros are further bolstered by high GDP growth expected this year, and the declining interest rate environment which is why FIIs are on a buying spree.

“Investors should not panic and exit from the market now. Remain invested, monitor the developments and wait for the dust to settle,” Vijayakumar added.

Technical outlook by analysts

On the technical front, analysts flagged a shift in short-term trend after the Nifty closed below its 5-day exponential moving average (EMA) placed at 24,340.

“Immediate resistance is seen between 24,340–24,500, while support lies in the 23,978–23,800 band,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Rajesh Palviya, SVP – Technical and Derivatives Research, Axis Securities, said over the past three weeks, the Nifty 50 has been consolidating within the 24,000 to 24,600 range, suggesting a short-term sideways trend.

However, the index remains well above its 20-, 50-, 100-, and 200-day simple moving averages, which points to sustained bullish sentiment over the longer term.

“On the upside, the Nifty is likely to build on this strength and may advance toward the 24,800 to 25,000 levels. The key support area lies between 24,000 and 23,800, making any dip toward this zone a potential buying opportunity for traders. The weekly Relative Strength Index (RSI) remains in positive territory, indicating continued upward momentum.”

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European stock markets are poised for a positive opening on Friday, buoyed by recent confirmations of a US-UK trade agreement and growing anticipation surrounding crucial trade negotiations between the United States and China scheduled to commence this weekend.

Investor focus will also be firmly on corporate earnings, particularly from the banking sector, and fresh trade data out of China.

Early indicators point towards modest gains across the continent.

Futures data from FactSet suggests the pan-European Stoxx Europe 600 index could open approximately 0.3% higher.

Similarly, the UK’s FTSE 100 is anticipated to rise by 0.3%, while Germany’s DAX and France’s CAC 40 are projected to open with gains of around 0.2%.

This follows a generally positive close for most major European indices on Thursday, although the UK’s FTSE 100 bucked the trend, slipping 0.32% and thereby snapping its remarkable record winning streak which had ended on Wednesday.

China trade data beats expectations amid tariff pressure

Adding to the complex global picture, fresh trade data released from China on Friday morning offered a surprising upside. China’s exports surged by 8.1% in April (in US dollar terms) compared to the previous year, significantly beating Reuters’ poll estimates of a 1.9% rise.

This robust export performance occurred even as Chinese businesses began to more fully absorb the impact of heightened US tariffs that took effect last month.

Meanwhile, Chinese imports showed a narrowing decline, falling just 0.2% year-on-year in April, considerably better than economists’ expectations of a 5.9% drop.

This suggests that Beijing’s efforts to stimulate domestic demand may be gaining some traction. Asian-Pacific markets traded mixed on Friday as investors parsed this new data.

Earnings in focus: Commerzbank shines

Corporate earnings remain a key driver of market sentiment.

German lender Commerzbank delivered strong first-quarter results on Friday morning, reporting a 12% year-on-year increase in net profit to 834 million euros ($937 million).

This figure comfortably surpassed analyst expectations of 738.5 million euros (LSEG data) and marked the bank’s highest quarterly profit since 2011.

Revenues also rose 12% to 3.1 billion euros, ahead of the 2.96 billion euros anticipated by markets.

Commerzbank reaffirmed its full-year guidance, aiming for a net profit of 2.8 billion euros in 2025 (expected to be 2.4 billion euros after restructuring).

Both Commerzbank and Italy’s Mediobanca (also reporting earnings) have recently been subjects of takeover speculation involving UniCredit.

Investors will also be digesting results from Portuguese utility EDP, which faced scrutiny after a major power outage earlier in the month.

Global cues: Wall Street futures muted

Overnight on Wall Street, market sentiment was somewhat subdued.

Futures tied to the Dow Jones Industrial Average fell 52 points (0.1%), while Nasdaq 100 futures slipped 0.08%, and S&P 500 futures were off about 0.1%.

This slight caution in US futures followed a period of strong gains earlier in the week, partly driven by hopes for progress in trade negotiations and some reassuring comments from Federal Reserve officials.

As European markets open, the interplay between robust Chinese export data, key corporate earnings, and the overarching anticipation of the US-China trade talks in Switzerland will likely shape trading dynamics.

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