Weekly round up
After falling sharply on Monday’s open, UK markets managed to recover most of their losses with the FTSE 100 Index rising 1.6% to trade at 7,526 points at the time of writing.
Investors digested positive UK earnings reports this week, with Natwest Group’s Q1 pre-tax profits jumping 41% to £1.2 billion on higher interest incomes, which was well above analyst forecasts of £0.8 billion. AstraZeneca reported core earnings per share of $1.89, beating market forecasts of $1.70 as sales came higher than expected on the back of treatments for kidney disease and rare conditions, and the company confirmed its 2022 outlook.
Also, household goods firm, Reckitt Benckiser, joined rivals Unilever and Proctor & Gamble in posting strong sales on the back of price hikes, saying it sees full-year sales in the upper end of its 1-4% guidance.
The Nationwide House Price Index in the UK climbed 12.1% year on year in April of 2022, easing from a 14.3% advance in the previous month and below market expectations of 12.6%. The price of a typical UK home climbed to a new record high of £267,620. Housing market activity has remained solid with mortgage approvals continuing to run above pre-Covid levels and demand being supported by robust labour market conditions.
In the commodity markets, Brent crude futures rose to $109.5 per barrel on Friday and are up more than 2% in April. The UK oil benchmark is heading for its fifth straight monthly gain after another volatile period market caused by geographically driven supply disruptions and Covid-induced demand slowdown in China.
The Russia-Ukraine war has entered its third month despite diplomatic efforts for a ceasefire with the EU inching towards joining the US and UK in imposing a ban on Russian crude imports, keeping upward pressure on oil prices. Russia has also halted gas supplies to Bulgaria and Poland after the countries refused to pay gas imports in roubles, escalating an energy crisis in Europe.
Gold rose to $1,915 an ounce on Friday amid concerns over US economic growth, but is on track to end the month lower as bets for aggressive interest rate hikes by the Federal Reserve reduced gold’s appeal. Analysts suggested that disappointing US GDP numbers could take some pressure off the Fed to tighten as aggressively as it has hinted, a view that provided recent support to gold prices and caused the dollar to weaken slightly.
US equity futures fell on Friday, reversing some of the gains in Thursday’s regular session after disappointing reports from Amazon and Apple. Amazon fell circa 8% in pre-market trading after reporting a surprise loss due to its investment in Rivian, while Apple declined more than 2% amid an expected hit from supply chain constraints. Elsewhere, Intel fell 3% after issuing weak forward guidance and Robinhood fell around 10% on a wider than expected loss, shrinking revenue and a decrease in monthly active users.
These moves came after US major indices rallied on Thursday, with a 3.1% rise in the tech-heavy Nasdaq, followed by a 2.5% gain in the S&P 500 and the Down Jones Industrial Average rising by 1.9%, despite an unexpected 1.4% contraction in US first quarter GDP.
Elsewhere, the US dollar is set to rise 5% in April, and is on track for its best monthly performance in nearly a decade, lifted by expectations of faster US interest rate hikes and worries about growth in Europe and China.
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