Weekly Equities Outlook: JPMorgan, Next and BP

JPMorgan in focus with the Fed rate decision

All eyes are on the Federal Reserve interest rate decision on Wednesday, where the market is now pricing in a 90% probability that the Fed will hike rates by 25 basis points.

This comes after a stronger-than-expected non-farm payroll report and after core CPI came in hotter than expected at 0.3% month-on-month. Furthermore, headline inflation has remained above the 2% target for over five years. Add to this oil prices, which are over $100 a barrel owing to the prolonged Middle East hostilities with Iran, adding to inflationary pressures going forward.

If the Fed doesn’t hike rates, there is a question of credibility. However, what will be interesting is how Kevin Warsh, who has a dislike for forward guidance, communicates whether this is a one-off or the start of a hiking cycle and whether he manages to convince the markets that the Fed has inflation under control.

For banks, their fortunes are directly tied to the Fed’s policy path. A rate hike can result in increased profitability through better lending margins and higher net interest income, both of which are positive for banks.

However, a hawkish Fed with higher-for-longer rates means borrowing costs rise, loan demand can weaken, credit risks increase and economic growth could slow, which is potentially negative for banks.

There are three possible scenarios from this week’s meeting.

1. The Fed hikes and is seen as getting ahead of inflation.

If markets start to believe that one or two hikes could reduce the need for a more damaging tightening cycle later, this could bring longer-term yields down, lower the implied terminal rate and ultimately help banks.

The Fed could hike and inflation credibility could improve, while yield pressures remain. This could play out positively over the longer term, although attention will quickly turn to the next meeting.

2. The Fed hikes but remains hawkish.

In this scenario, the initial reaction could be negative as markets price a higher terminal rate and further hikes. Higher yields would provide support for banks’ margins, but the longer-term impact on loan demand, credit quality and economic growth would become increasingly important.

3. The Fed holds.

This could be the worst-case scenario for stocks and risk assets, as it could lead markets to anticipate the need for more drastic tightening later. A hold would invite the market to do the tightening through the long end of rates, which could be more damaging to the economy.

How to trade JPMorgan

JPMorgan has been trending northwards since 2023, rising to a record high of 363 in July this year before easing back slightly and consolidating above 350.

The consolidation has brought the RSI out of overbought territory. Buyers will look to rise above 363 to create a higher high and head towards 400.

On the downside, immediate support is seen around 330, the 2026 high. A break below here turns attention to the 50 SMA, which is at 313.

Next keeps consumer discretionary under the spotlight with the BoE rate decision

The Bank of England is expected to leave interest rates unchanged at 3.75%, as Bank of England Governor Andrew Bailey has suggested that the central bank is prepared to be patient with elevated inflation driven by higher oil prices.

The market is pricing in one rate cut before the end of the year. However, the focus will be on the vote split. A more hawkish split could signal that the central bank is prepared to keep rates higher for longer.

The decision is key for several sectors of the economy, including consumer spending. Next is considered a bellwether for consumer spending, and it is interesting because the Bank of England rate decision affects disposable income and consumer confidence.

If the Bank of England is hawkish because inflation is sticky, households could remain under pressure from higher borrowing costs. This is a headwind for discretionary spending.

A more dovish message, which could be less likely given that oil prices are still rising, could help lower rate expectations and boost expectations around consumer spending and consumer confidence.

How to trade Next

On the weekly chart, Next has been trending higher since 2022, reaching a record high of 16,175 in July this year before easing back to 14,000. The price continues to consolidate below the record high, trading at 14,685 at the time of writing.

Despite trading above its 50 and 200 EMAs in a constructive trend, momentum is slowing, with the RSI pointing lower.

A break below 14,000 exposes the 50 EMA around 13,500. A break below here brings attention to the rising trend line at 12,235 and the 100 EMA. A break below 11,650 creates a lower low, turning attention to 10,740, the September 2025 low.

Should the 14,000 support hold, buyers will look to rise above 16,175 to create a higher high and extend the bullish trend.

BP and energy stocks supported by elevated oil prices

Oil prices rose above $100 a barrel last week for the first time since May as hostilities in the Middle East ramped up, raising concerns over supply and lifting the geopolitical risk premium.

Furthermore, over the weekend, Saudi Arabia shut down a key oil pipeline, with expectations that Iran was responsible for attacks on the vital Saudi pipeline.

This adds to supply concerns and could push oil prices higher. Oil prices are likely to continue climbing until there is a sense of a diplomatic solution, or at least talks to reopen the Strait of Hormuz, which remains effectively closed, with few vessels transiting the key waterway.

While oil prices remain elevated, this is supportive of energy stocks.

How to trade BP

BP recovered from the 446 low, rising above the 250 EMA to a high of 565. Buyers, supported by the RSI above 50, will look to extend gains towards 595, the 2026 high. A rise above here creates new record levels.

On the downside, support can be seen at the 50 EMA at 530. A break below here exposes the 200 EMA at 500.