The FTSE 100 chalked up an 11th straight day of gains on Monday, its best run in eight years, but it is struggling to carry on the momentum this morning. Blue chips ticked lower early doors as heavyweights went down despite HSBC and AstraZeneca topping first quarter earnings expectations, as BP and Associated British Foods missed estimates. Still some ways to go until we beat the 14-day rally from late December 2016-January 2017. It’s a monster earnings day today for the FTSE.
Calm returned to Wall Street as the trade tensions easing-Trump blinked narrative dominated sentiment. The S&P 500 notched a tiny gain, the Dow Jones was up 0.3 per cent, and the Nasdaq fell as Nvidia dropped. Volatility is lower. Key moment whether it’s going to kick on higher or selling will resume. Now, US President Donald Trump says he’s going to ease tariffs for automakers, providing a little more detail to his plans on that front, which had already been mooted. This supported sentiment in Asia overnight and followed through to European trade ex-UK, with the Dax rising 0.75 per cent.
China offered an olive branch – with the commerce ministry apparently saying Beijing was willing to support normal cooperation with American firms. Treasury secretary Scott Bessent was talking about an escalation ladder for tariffs…so lots of noise. But Temu is hiking prices… the consumer has yet to feel the impact. Dallas Fed survey weakest since 2020, but hard data still holding up. In the US, we have Jolts job openings today, ahead of GDP and personal consumption expenditure inflation, the Fed’s preferred measure, tomorrow.
Profit plunge, debt up, buybacks cut: BP shares tumbled after the oil major posted a near halving in profits in the first quarter, underlining the challenges facing the company as it tries to mollify disgruntled investors. BP is under intense pressure to turn the tanker around and while captain Murray Auchincloss is doing his best, there’s something of a mutiny onboard led by ‘Fletcher’ Elliott Management. In February, it pledged to slash renewable energy investments and focus on core oil & gas production. But Elliott is pressing for more, and rumours of a takeover are circulating. We’ve been here before with BPand it’s hard to see the British government letting it go, but the chatter remains.
HSBC posted a 25 per cent drop in profits, but the headline last year was flattered by $3.7bn from the sale of its banking businesses in Canada and Argentina. Excluding these, adjusted profit before tax made a healthy 11 per cent gain to $9.8bn, driven by its wealth business and capital markets divisions. Read our Deep Dive on HSBC here.
AstraZeneca’s core EPS of $2.49 was above the $2.26 expected, while it stuck to previous guidance for the year. Exposed to tariff drama and revenues missed expectations, which seems to have hit shares. But it’s mending fences in China after some scandals there. China sales up 5 per cent but were still a little light…though this seems down more to lower flu numbers this quarter than anything related to the anti-corruption stuff. Tariffs and drug pricing remain headwinds to shares.
Associated British Foods sank about 9 per cent on weaker sugar guidance due to tariffs.
On Monday, Rheinmetall, Europe’s top ammo maker, posted a 46 per cent rise in sales and 49 per cent rise in profits. Shares rose some 6 per cent on preliminary Q1 results and now up 73 per cent this quarter as Europe increases defence spending. Lufthansa and Adidas both confirmed guidance for the year – both likely to take a hit from tariffs.
Looking to the US, today we have earnings from Coca-Cola (KO), General Motors (GM), Paypal (PYPL), Spotify (SPOT), Mondelez (MDLZ), Snap (SNAP), Starbucks (SBUX), Visa (V) and Super Micro (SMCI). Visa is interesting – how many consumers are making just the minimum payment? Apollo says 11.1 per cent of credit card accounts are currently only making the minimum payment – the most in history.
Sterling rose to its best in over two years against the US dollar. GBPUSD traded above 1.3440 earlier for its best since Feb 2022. I don’t know if this is a strong UK, weak dollar narrative or part of a bigger reallocation story. British economic prospects and rate outlook seem to be more bearish on the pound than the price action suggests.
By Neil Wilson, Investor Strategist at Saxo UK
