Early Morning Call: FTSE 100 rebounds after a week of declines; AB Foods and Aston Martin in focus

Europe's equity markets

Europe's equity markets opened higher on Monday after a week of heavy losses. The German DAX lost 3%, posting its worst week in three and a half months. This Monday, the Germany index could react to the Information and Forschung (Ifo) business climate survey.

It is expected to fall to 90.7 in June from 91.7 the previous month, a second straight month of declines. Like in May, the current situation and expectation components are forecast to fall. More hurdles are lined up this week: the Gfk consumer confidence on Wednesday, June consumer price index on Thursday, and retail sales on Friday.

AB Foods

Associated British Foods raises its full-year profit outlook. The group reported group sales up 16% to £4.73 billion in the third quarter. Primark sales rose 13% to just under £2 billion, with like-for-like sales growth of 7%, supported by higher average selling prices. Associated British (AB) Foods now expects adjusted operating profit, its key profit measure, to be "moderately ahead" of the £1.43 billion made in 2021/22.

Goldman Sachs

Goldman Sachs announced after the close on Friday that it's just started cutting managing directors around the world as it cuts headcount amid a slump in Mergers and acquisitions (M&A) and from companies wanting to raise money.

Bloomberg reported that Goldman Sachs will shed 125 managing director roles. Of the near 40,000 employees, Goldman doesn't report how many managing directors it has, although in 2021 it promoted 643 to MD roles; these roles also carry a partnership qualification.

Goldman Sachs shares fell to a three-month low on Friday after CNBC reported the bank is likely to take a large writedown for its acquisition of fintech lender GreenSky Inc. Goldman Sachs has been running a sale process for GreenSky, acquired in 2021 for $2.2 billion, and may take a writedown on the $500 million of goodwill.

Banking sector overview

Goldman Sachs is not the only bank to cut jobs. JPMorgan Chase & Co. announced that it will end around 40 investment banking positions as part of its effort to cope with the global slowdown. Recently, Citigroup started cutting hundreds of jobs across the company this year and is planning to shed 30 investment banking jobs and 20 more at its corporate bank in London.

The banking sector will be the centre of attention over the next few weeks. On Wednesday, the Federal Reserve (Fed) is due to release the results of its annual bank health checks after market close. The results dictate how much capital banks need to be healthy and how much they can return to shareholders via share buybacks and dividends.

Banks aren't allowed to announce their plans for dividends and buybacks until typically a few days after the stress test results, but we can expect them at the latest when they publish their quarterly earnings in mid-July.

US oil

On the commodity market, Friday's Baker Hughes rig count saw six oil rigs taken offline as more oil field owners judged the market just wasn't priced high enough to pump. US oil rigs reached 546 this week, their lowest since April 2022. The number of gas rigs on production rose by six, keeping the total rig count steady at 687.