UK and Europe
European shares were directionless on Tuesday, giving back early gains as markets meander sideways ahead of the latest policy decisions from the Federal Reserve and Bank of Japan.
Big gains from Standard Chartered (LON:STAN) and BP (LON:BP) which reported well-received earnings and stable oil prices enabled a small rise on the FTSE 100, though tech companies dragged ahead of first quarter results from Apple (NASDAQ:AAPL). The German DAX and French CAC indices both slid to five-day lows.
Shares of BP gained as much as 4% after the oil major reported a sharp decline in profits and revenues but managed to conjure up results that were better than expectations. BP has made strides in reducing costs and boosted trading revenues in the face of decade-low oil prices and a warm winter that hobbled refining margins.
Standard Chartered impressed with its latest set of results that like other top banks saw a sharp reduction in profits that came ahead of expectations. Share rose to the top of the FTSE 100 as pre-tax profits of $589m, down from $1.4bn a year ago lifted hopes that the bank has turned a corner after its first full-year loss in 26 years.
Whitbread (LON:WTB) shares were amongst the top risers on the UK benchmark equity index after the company raised its dividend in response to growing profits at Costa and its hotels and restaurants. Increasingly loyal coffee-drinkers meant same store sales at Costa grew 2.9% with store expansion meaning total sales were up 16.3%. Revenues at Whitbread’s hotels and restaurants including Premier Inn rose 9.8%. There is increasing competition and technological innovation in food retail and accommodation and Whitbread is taking the approach of rapid expansion to dominate market share.
US
US stocks opened higher amid generally positive corporate results, though gains were limited by weak economic data and nerves ahead the Fed meeting and anticipation over Apple’s Q1 results.
Procter & Gamble (NYSE:PG), 3M (NYSE:MMM), DuPont (NYSE:DD), Coach (NYSE:COH) and Hershey (NYSE:HSY) all beat profit estimates whilst Eli Lilly (NYSE:LLY) and Whirlpool (NYSE:WHR) missed.
Stocks have evidently paused ahead of the meeting since there is a distinct risk the Fed converts to a more neutral tone in order to put a June rate hike back on the table.
FX
The US dollar was weaker across the board on Thursday after data showed durable goods orders and housing starts rose slower than forecast in March whilst consumer confidence dropped in April. The dollar has fallen for two days, undoing gains from the prior two days. The US dollar index is essentially unchanged in April, a sign of uncertainty ahead of the Fed meeting.
The British pound proved the biggest beneficiary of dollar weakness as Brexit fears continue to ease despite a Daily Telegraph poll showing support for leaving has risen to 43%. GBP/USD rose above 1.46, its highest in eleven weeks.
Commodities
Risk-on sentiment in equities, BP Q1 earnings ahead of expectations and a weaker dollar all contributed to higher oil markets on Tuesday.
Dollar weakness was a recipe for modest strength in precious metals on Tuesday, though gains were limited as gold and silver traders sit on their hands before the Fed meeting. The tone from the Fed will likely play a big role in which direction gold breaks from its seven-week range.
DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.