It’s been another day of record highs for European markets with the EuroStoxx600 posting another record peak, along with the FTSE 250, which has undergone a decent surge in momentum since the end of last month.
Since the index closed in March at 21,518, the UK mid-cap has risen just under 5%. The FTSE 100 has also had another decent session, hitting its highest level since February 2020, as it looks to close in on the 7,000 level.
While other major indices have led the way in posting record highs on a fairly regular basis, there are increasing signs that UK stocks are finally finding favour with investors as the UK economy embarks upon the next stage of its economic reopening.
We’ve already seen the FTSE 250 make record highs, which leaves the FTSE 100 as the serial laggard with a lot of ground to make up, given it is still well below last year’s peaks of 7,689.
GlaxoSmithKline shares are leading the blue-chip index higher on reports that Elliott Management have built up a multibillion-pound stake in the business.
This activist shareholder has a track record of shaking things up and Glaxo shares have seriously underperformed the wider market for several years. Earlier this year they hit their lowest levels in a decade, with the company being increasingly left behind by its peers AstraZeneca and Pfizer. The company is in the midst of a restructuring program with the consumer business set to be split away from the wider pharmaceuticals business, and some shareholders may be starting to get restless.
Other decent performers have been the likes of Kingfisher, which was on the receiving end of a price target upgrade from Citigroup, while we also saw a decent trading update from Travis Perkins.
Travis Perkins share price has been on a slow grind higher over the last 12 months, though it still remains below its 2020 pre-pandemic peaks. Nonetheless today’s Q1 trading update has continued the positive trend, pushing the shares up to one-year highs, with group like for like sales excluding Wickes increasing 17.4% on the year. Its Toolstation operation saw like for like sales increase by 42%.
The Wickes demerger is expected to complete on 28April, with the business here also performing well, despite the closure of its showrooms, with like for like sales up 19.7%, as the business benefitted from the boom in home improvements as a result of the lockdowns.
THG Group shares are down sharply today after reporting a 41.5% rise in revenues to £1.6bn. Adjusted EBITDA, rose to £150.8m, a rise of 35.2% in 2019, however the company posted an operating loss of £481.8m primarily as a result of a £331.6m payments charge, as well as £14.3m in respect of IPO fees. Without these, profits would have come in at £45.5m.
The best performing part of the business was THG Beauty which saw a 57.1% rise in revenues to £751.6m, helped in no small part by the acquisition of Perricone MD in September 2020.
The company went on to say that Q1 trading has also been robust with revenue growth broad based across all of its business sectors.
After the woes of the last few days Deliveroo shareholders were hoping for some good news this morning, given the sharp falls in the share price seen since the shares were listed at the end of March. This morning’s Q1 update showed that group orders rose 114% year on year to 71m, with monthly active users rising to 7.1m, a rise of 91%.
The company kept its guidance unchanged for full year annual GTV growth of between 30% to 40%, and a gross profit margin of 7.5% to 8%, though the guidance came with a warning that growth might slow as lockdown restrictions get eased, and it is this that appears to be cutting through, as the shares close down on the day. However encouraging today’s update would appear to be, it seems that some investors might want to see further signs of progress before piling back in.
Other fallers have been financials which appear to be lower in line with the fall in yields, while oil and gas stocks are also lower.
US
US markets have seen more record highs today after US retail sales surged 9.8% in March, and weekly jobless claims plunged to a post pandemic low of 576k.
With the latest numbers from Bank of America and Citigroup continuing the theme from JPMorgan and Goldman Sachs yesterday, investor confidence has returned with a vengeance.
Bank of America saw Q1 profits come in at $0.86c a share, with revenues rising to $22.82bn, driven by outperformance in its equities, and Fixed Income trading divisions. Like JPMorgan the bank noted lower loan demand, however deposits grew 25% to $924bn, and loans fell to $291bn.
Citigroup has also had a decent Q1, posting profits of $3.62c a share, though revenues were softer at $19.3bn. The main headline however is that Citigroup is retreating from retail banking in 13 markets across Asia and Europe, including in China, India, Russia and South Korea. Income also got a boost after Citi rotated $3.9bn out of loan loss reserves back into the business, as the bank upgraded its outlook for the US economy.
On the flip side Delta Airlines posted a $1.2bn quarterly loss, but said that the recent recovery in the US economy has seen domestic leisure bookings recover to 85% of 2019 levels. If that continues the airline said it expects to break even in June, though that won’t prevent an expected Q2 loss of $1.5bn, and a return to profitability in Q3.
The early enthusiasm for Coinbase shares appears to be waning slightly, although we did open higher after yesterday’s close at $328. While we closed above the $250 reference price, the fact we opened at $381 and weren’t able to close above it is a little worrying and is perhaps indicative of a market that is perhaps a little on the long side at higher levels. There is no question that investors are enthusiastic about Coinbase, with Cathie Wood’s ARK Innovation buying into the company while reducing her holding in Tesla.
FX
The US dollar has continued to look soft, sliding across the board, along with yields which, despite the blow out retail sales numbers and decent jobless claims numbers, have declined to one-month lows.
This seems rather counterintuitive given that for the past three months yields have been rising due to concerns about rising prices and a strong economic recovery, both of which we are currently seeing.
The calculation appears to be that some in the markets think this could be as good as it gets. Time will tell whether that assumption is correct, but for now the US dollar is under pressure.
Commodities
Gold prices have started to pick up again, helped by a weaker US dollar and continued softness in US 10-year yields which are slipping back towards their recent lows.
After big gains yesterday which saw crude oil prices hit their highest levels in a month, Brent prices have slipped back a touch, despite the IEA upgrading its demand forecasts for this year.
Bitcoin prices appear to be treading water for the time being, however Ethereum prices are continuing to go from strength to strength with yet another day of record peaks.
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