Europe
While European markets have undergone rather mixed fortunes this week, the FTSE100 and FTSE 250 have continued to push higher with the FTSE 100 back above 7,400, a potential record weekly close as well as edging back towards its all-time highs at 7,447, with oil and gas, health care, tobacco and financials putting in a strong performance.
AstraZeneca (LON:AZN) is having a good day after encouraging results for one of its lung cancer drugs, Imfinzi. This has raised expectations that a successful launch could well boost revenues substantially in 2018.
On the other side of the coin, sector peer Hikma (LON:HIK) continues to slide after yesterday’s announcement of a delay to its generic asthma treatment drug to rival Advair, which received an unfavourable response from the US (FDA) Food and Drugs Administration.
Lloyds Banking Group (LON:LLOY) is also on the back foot on reports that may have to pay £80m to customers in respect of another mis-selling scandal.
Investors don’t appear to be too perturbed about the prospect of a re-privatisation of Royal Mail (LON:RMG) in the Labour party’s manifesto, the shares moving above their April highs to hit their highest levels since mid-January.
BT Group (LON:BT) shares are enjoying a bit of a rebound from three year lows of 297.40p, after yesterday’s losses, having had its rating reaffirmed by RBC with a price target of 410p.
US
US markets look set to close the week on a down note after yesterday’s slide on the back of a couple of disappointing US retailer reports. With evidence building that US consumer spending is showing signs of slowing down, there is a concern that we could see further evidence next week when Target (NYSE:TGT) and WalMart (NYSE:WMT) are also set to release their latest quarterly updates.
JC Penney (NYSE:JCP) provided further evidence of that today with a slide in revenues and a bigger than expected fall in same store sales of 3.5%, and while Nordstrom (NYSE:JWN) beat profit expectations the sales numbers pointed to a similar story.
At the moment the perception is that the recent weakness in big US retailers is more down to changes in consumer shopping habits to an on line model, and away from the more traditional model of mall visits, however this only holds water if the actual hard data reflects this shift. In recent months it hasn’t with retail sales in February and March declining -0.3% and -0.2% respectively.
Today’s April number was similarly disappointing, coming in at 0.4%, below expectations of 0.6%, though March was revised up to 0.1%. There was also little evidence of inflationary pressures as CPI for April came in slightly weaker at 1.9%.
FX
The pound has not had a great week, running into some selling pressure just below 1.3000, however this would be the first negative week since early April, and only the second one since mid-March. This week’s data hasn’t done the bullish case that much good, while the Bank of England’s cautious outlook yesterday hasn’t helped.
The US dollar on the other hand has had its best week in six, pulling back some ground as a more positive risk environment prompts some unwinding of long Swiss franc and Japanese yen positions.
After opening the week at its highest levels this year the euro has had a disappointing last few days though it has managed to pull back off four week lows.
Commodities
Commodity prices in general have stabilised this week with the CRB (PA:CRB) posting its best weekly gain since mid-March, helped by strong rebounds in oil prices, cocoa, rough rice and cotton prices, with wet weather helping drive cotton and rice prices higher.
Crude oil prices have continued to stabilise this week after the big losses last week, on expectations that we may well see an extension to the production curbs which are due to expire at the end of June. While today’s rig counts are expected to show another increase the downward momentum that was starting to accelerate last week appears to have been arrested, with prices set to post their first weekly gain in four weeks.
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