The FTSE 100 broke into uncharted territory yesterday after a recent ride higher on the coattails of its US and European peers saw the index post both an intraday record peak, as well as an all-time high closing level. The pound continues to drift largely due to a resurgence in the US dollar, with cable this morning trading down to levels not seen in almost 6 weeks.
Mixed UK construction data
The main economic release from the UK today has seen the construction PMI come in at 52.5, a slight improvement on the 52.2 seen last time out which was also the consensus forecast. This is the sixth successive print above 50 and on the face of it suggests that the sector is in rude health. However upon closer inspection there are some components of the release which may keep any exuberance in check, as the number of new orders in fact slowed. To be more specific, there was a solid upturn in civil engineering activity for the month of February whilst house building activity expanded at its slowest pace in six months. Overall this leads to no strong conclusions that can be drawn from the data and unsurprisingly this has led to a limited reaction in the markets.
Global equity rally lifts UK stocks
Whilst the highly anticipated speech before congress from Donald Trump saw a fairly limited reaction in the markets, a spate of buying in stocks began shortly after with the Nikkei 225 breaking higher in Tokyo. European traders arrived at their desks in Frankfurt, Paris and Madrid in a bullish mood with bourses on the continent beginning to surge higher before the London open. As has been the case lately, the scale of the buying on the leading UK benchmark was relatively smaller than elsewhere, however it was still enough to push the FTSE 100 to an all-time high. With the benchmark flat on the day at the time of writing there’s been a notable move higher in ConvaTec, with the firm seeing its stock rise by more than 5% on the day. BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) are also adding to yesterday’s gains as the mining sector is receiving a dual boost from a decline in the GBP/USD exchange rate and signs of strength in the Chinese economy. It’s not been such a good morning for Capita shareholders though, with the share price falling over 7% after CEO Andy Parker announced his resignation. The company, which is best known for administering TV licensing and the London congestion charge reported that profits had fallen by a third which has led to Mr. Parker’s decision to step down.
Snapchat IPO on Wall Street
This afternoon will see shares in the messaging app Snapchat listed on the US stock market for the first time, with the stock expected to be priced at $17. This level is slightly above the $14-16 range that was expected and the flotation values the business at $24bn, despite the firm having never made a profit. Demand for the stock is hot and with the equities in general being in a particularly bullish mood, even by their recent high standards, it is not hard to see why the shares are oversubscribed by more than ten times ahead of the listing. Analogies to other tech IPOs in recent years are obvious with a comparison to Facebook (NASDAQ:FB) particularly interesting. The listing of Facebook was the largest ever for a tech firm and even though the stock price halved in the first few months of trading it has subsequently rallied around 250%. With this in mind the critics who point to Snapchat posting a $515M loss on revenues of $404m have plenty of ammunition to suggest that Snapchat is overvalued but if it performs even half as well as Facebook they would not want to be caught short in the coming years.