There is plenty of noise around capital markets, however as is often the case at these times one can get moves within stocks and sectors, but the net effect is often little movement in the overall index. To illustrate this point Standard and Chartered bank, which has had a rough couple of years maintained the recent pattern of banks announcing falls in profits, but no worse than expected leading to a sharp jump in the share price. Bob Dudley, the Chief Executive of BP, who has been under fire along with several others over pay, announced results that also comfortably beat expectations, leading to a decent jump in the share price. Despite these moves from leading companies the FTSE 100 remains close to the level it started the week.
It was a sad day for the high street as Austin Reed, the gentleman’s outfitters that holds a Royal Warrant and once dressed Winston Churchill amongst others, was placed in administration. This follows on the heels of another old retail institution, British Homes Stores earlier in the week.
Sterling continues its recovery post Mr Obama’s visit as polls suggest that the remain “in” vote is gaining traction, perhaps project fear is working after all. It seems hard to believe that the threat of organising a trade deal with the world’s fifth largest economy could take ten years to agree had that impact. A deal with Canada took 2 years possibly proving it has to be easier to deal with one economy, rather than the EU made up of 28 nations.
We mentioned at the start of the week how it was a busy week for macro data, ahead and, post announcements from the Federal Reserve and the Bank of Japan. The data so far this week from the US economy is once again mixed. New home sales came in slightly below expectations on Monday. On Tuesday we had durable goods orders that once again showed an increase month on month, but a gain of 0.8% was slightly below expectations. Markit’s composite flash Purchasing Managers index reading for the month of April came in at 51.7, indicating an economy that continues to expand, but likewise at a lower reading than was forecast. Consumer confidence has been on the dip recently and again the Conference Board’s reading of 94 was not so bad, but again just below expectations. The Citi economic surprise index for the US economy has been drifting lower, despite this the S&P 500 has held its ground. If history is anything to go by either economic surprises need to pick up or markets might suffer.
Apple released Q1 earnings and the stock duly fell 8% on disappointing sales of the iPhone. Perhaps Apple’s lack of innovation over the past few years is starting to catch up with it.