What to expect in the markets this week: May 19, 2025

Retail Earnings in Focus

Major UK retailers are set to release their quarterly earnings, providing a window into consumer spending amid persistent inflation concerns. Analysts expect mixed results, with high-end retailers like Marks & Spencer potentially outperforming, while budget chains face pressure from cost-conscious shoppers. Across the Atlantic, US retail giants such as Walmart and Home Depot will also report, offering insights into global consumption patterns. “Retail earnings will be a litmus test for how inflation is shaping buyer behavior,” said Sarah Jennings, chief economist at Barclays. Strong results could bolster confidence in consumer-driven stocks, while weak figures may fuel recession fears.

US Housing Data Under Scrutiny

In the US, housing starts and existing home sales data, due midweek, will shed light on the property market’s resilience. With mortgage rates still elevated, economists predict a slowdown in construction and sales, which could ripple through related UK sectors like construction and home furnishings. Investors will be watching closely for signs of a broader economic cooldown, particularly as the US Federal Reserve signals caution on rate cuts.

Central Bank Signals and UK Inflation

The Bank of England (BoE) is not expected to adjust interest rates this week, but remarks from Governor Andrew Bailey at a scheduled event could provide clues on future policy. With UK inflation hovering above the BoE’s 2% target, markets are pricing in a cautious approach to rate reductions. Meanwhile, US Federal Reserve minutes, set for release on Wednesday, will be parsed for hints of a shift in monetary policy. “Any dovish signals from the Fed could lift global equities, but hawkish tones may strengthen the dollar and pressure UK exporters,” noted Michael Hewson, chief market analyst at CMC Markets.

Geopolitical Tensions and Energy Markets

Geopolitical risks remain a wildcard, with ongoing tensions in the Middle East and Ukraine driving volatility in energy markets. Brent crude prices have stabilized above $80 per barrel, but supply disruptions could push costs higher, impacting UK energy firms and consumer prices. Investors are also monitoring China’s economic recovery, as weaker-than-expected growth could dampen demand for commodities, affecting London-listed miners like Rio Tinto and Glencore.

Corporate Movers and Shakers

Beyond retail, earnings from tech firms like Nvidia and UK-based cybersecurity company Darktrace will draw attention. Nvidia’s results could sway sentiment in the AI sector, while Darktrace’s performance may reflect growing demand for cyber defenses amid recent high-profile breaches, including a cyber attack on UK legal aid systems. Additionally, John Deere’s earnings will offer a glimpse into agricultural demand, with implications for global food prices.

Market Sentiment and Technical Levels

The FTSE 100 is testing resistance near 8,500, with analysts eyeing a potential breakout if earnings and US data align favorably. However, caution prevails due to overbought signals in some sectors. “Markets are at a crossroads,” said Jennings. “Positive catalysts could drive a rally, but downside risks from geopolitics or weak data loom large.”

As the week unfolds, investors are advised to stay nimble, with key data and corporate updates likely to shape market direction. For UK traders, balancing domestic signals with global trends will be critical in navigating this pivotal period.