HL commentary as it happens

FTSE 100 has reached a new record

The FTSE 100 has reached yet another untouched summit, as investors remain in a positive mood. There has been a flurry of strong results from big hitters, which has helped carry the FTSE to these new highs. The market’s also reacting to the news that consumer confidence has improved slightly, according to data from GfK. In addition, the FTSE’s being lifted by positive news in the US overnight, with markets moving higher in the region, following positive news from tech companies.

Optimism falls away after US growth slips and stagflation looms

A sharper than forecast slowdown in US economic growth, amid signs of still stubborn inflation, has smothered some of the optimism that has been surging through the markets. The FTSE 100 hit fresh intra-day highs earlier in the session, but retreated after the latest snapshot of the US economy came through. The S&P 500 has also opened 1.4% lower as the 'worst of both worlds' scenario risks emerging, and stagflation is potentially rearing its head.

This was the slowest growth recorded in almost two years and appears to indicate the pain of higher borrowing costs and a more fragile global economy are hitting home, given the slowdown in exports. Data from Barclays has also indicated that higher borrowing costs are taking a toll on the American consumer, with default levels surprising on the upside.

However, even though the engine of growth is whirring more slowly than expected, it’s not yet prompting a major rethink about earlier interest rate cuts. Inflation is still proving sticky, which is set to keep the Fed in a jam, cautious about bringing rate cuts in too soon. On an annual basis, in the first quarter, there was a larger than forecast increase in core personal consumption expenditure prices, which came in at 3.7%. ‘Higher for longer’ is still set to stay the mantra of US central bankers, despite the gears of the world’s largest economy shifting down.

Oil price steadies on demand questions

Markets are looking ahead to US GDP data, which has injected concerns over higher-for-longer interest rates back into the oil price. Brent crude has steadied at around $88 a barrel, which is still elevated overall on lower US stockpiles.

FTSE 100 continues record run

The FTSE 100 has risen again after concerns it was about to lose some steam after a record week. Recent warnings from Bank of England chief economist Huw Pill that interest rate cuts may be some way off had the potential to turn the heat down in the market. The FTSE’s record run has increased enthusiasm around the future prospects of the UK’s biggest companies, but prolonged positivity may be a long shot while the macro-economic landscape remains so uncertain.

Buyout offer for Anglo American increases worries about an exodus from London

The buyout offer from BHP, the world’s largest publicly listed miner, for Anglo American, is set to send a chill of concern through the City of London. There are concerns that if the deal goes through it could be the tip of the iceberg and more big names could leave the exchange.

The FTSE 100 may have raced to fresh highs this week, but it’s been a long time coming, and UK-listed companies are still considered to be undervalued. The premium offered by overseas buyers swooping on London-listed firms is seen as evidence that UK assets are still cheap, having been languishing lower, partly as a result of the Brexit-effect and the sluggish performance of the UK economy.

Although listing reforms are in process, and a charm offensive has been launched by the government to lobby more firms to list in London, pressure is likely to pile up for more concerted action to be taken. A cut to stamp duty on share purchases from the current level of 0.5% would be a first welcome step. It would help spur interest into owning slices of companies and give the LSE more of a fighting chance compared to its international peers.’

Oil heads towards $90 a barrel on supply surprise

A surprise drop in US stockpiles and a lack of movement on OPEC+’s production mandates, has helped pushed the price of Brent crude up to $88.6 per barrel. There’s also growing hope that interest rate cuts could be on the agenda in the near-term, which would boost demand for the black stuff.

FTSE 100 continues its record run following positive trading in the US

The UK market has demonstrated yet more stamina, with further gains achieved on what has already been a record-breaking week. A slight cooling of Middle Eastern tensions, coupled with broad based corporate earnings optimism are both helping the FTSE. In the US, markets have also continued to rally, based on strong earnings figures from high calibre and closely monitored companies. The large volume of company results this week gives investors a lot more to focus on than purely macro events, which is leading to the extra levels of market vitality.

Jeremy Hunt has less wiggle room to offer treats to voters

This snapshot of the UK’s public finances gives Chancellor Jeremy Hunt even less opportunity to offer a windfall of tax breaks ahead of the General Election. The magic money tree is increasingly thirsty, stuck in a drought caused by increased spending on public services and benefits. Although the amount borrowed dropped sharply compared to last March, on a 12-month basis the picture is less pretty. The government has had to borrow £6.6 billion more over the last financial year than forecast by the Office for Budget Responsibility.

Although tax receipts came in higher than last March, and there were large reductions in energy support scheme costs, and the amount of interest due on the debt, this situation looks set to deteriorate. Fewer interest rate cuts are now priced in by financial markets, which is likely to raise expectations about the costs of borrowing for the government.

Mr Hunt has been reportedly mulling plans to cut National Insurance for this third time in a row this year and raising the threshold for stamp duty. But he’s balancing on an increasingly precarious branch as he tries to shake down treats for voters.

Oil price strengthens ahead of US economic data

Despite a slight easing geopolitical risk, the oil price has tightened slightly at $87.3 a barrel. This follows an earlier easing, and also includes the impact of US economic data later on. Flash PMI will help map the demand picture as it will feed into the Federal Reserve’s appetite, or lack thereof, to cut interest rates.

FTSE 100 reaches a new record as tensions in Middle East ease slightly

The FTSE 100 has landed another record high, after bulldozing previous records yesterday. The market’s sprits are being lifted by an initial easing of tensions in the Middle East, as well as preparations for a very busy week for corporate news. Not all the updates are expected to be overly positive, big tech kicks off with Tesla results this evening. The tech-darling’s valuation has come under renewed pressure on news of price cuts, and its dramatic efforts to boost demand means there’s an element of trepidation about the earnings release. Another important consumer bellwether is due to report today, with Visa in the spotlight. Despite growing pressure on lower earners in the US, the overall picture looks set to show resilience. Visa’s expected to post increased profit as consumers spend more on dining out and travel.

Although there are some conflicting messages in the market, the overall sentiment has improved. Across the pond in the US, the main indices have picked up, and the UK’s followed suit. The mood can of course change at short notice, especially when so much hinges on a continuation of the calmer environment in the Middle East – which is by no means guaranteed. Secondary to that, it will be corporate outlook statements over the next couple of days that have the ability to move the dial in this uncertain period.