Market report: FTSE 100 falls, oil price barrels towards $91 and Disney announces password crackdown
- FTSE 100 has downbeat open ahead of US jobs data
- Oil closes in on $91 a barrel
- Disney to crack down on password sharing, following proxy battle victory
- Samsung upgrades guidance on higher chip prices
- Retail sales face the longest slump since the pandemic
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown:
“The FTSE 100 has gone backwards on its last trading day of the week, as investors digest PMI data as well as a downbeat tone over in the US. The major indices all shed between 1.2-1.4% on Thursday, with broad based declines suggesting the malaise is a widespread mood problem, rather than a sector specific issue. Investors are now looking ahead to today’s US job data which will highlight the strength of the labour market. The narrative around the potential for interest rate cuts has been slightly contradictory this week, so there’s a lot resting on this data to help steady the ship. A looser labour market could help back the argument that the economy is returning to more stable footing.
There is a fly in the ointment, in the form of the storming oil price. This is adding real inflationary concerns back into the market, and isn’t helped by the significant uncertainty that comes with geopolitical tensions. Brent crude is close to $91 a barrel, as efforts to instigate peace in the Middle East have gone unrewarded. Ongoing reduced supply mandates from OPEC+ are also causing upset to the price. Strong US data has boosted demand expectations too. Fundamentally, oil prices are cyclical, with ups and downs always to be expected. However, the trajectory of the price has been particularly bumpy in recent years and it’s unclear when this will smooth out over the longer-term.
Disney will begin cracking down on password sharing in June, in a bid to boost profitability. While Bob Iger failed to give specific numbers, the opportunity this presents is said to be significant. The bold move comes only a day after Disney investors backed the resident CEO – and other senior leaders – in a bruising proxy battle with activist investors, including billionaire Nelson Peltz. There has been unhappiness with the performance of the streaming business, and Iger is clearly keen to grasp the nettle and get the revenue funnel flowing more aggressively. Other priorities include finding partners for ESPN’s digital evolution. There are a lot of the right ideas being hatched, the main question now is how well Iger can keep those promises, and how well he can lay foundations for the next CEO, as it’s increasingly clear he won’t inhabit the throne forever.
Chip giant Samsung has signalled better-than-expected profits, with expectations of a ten-fold increase in quarterly operating profit, thanks to rising chip prices and recovering demand. The impressive development wasn’t enough to set the shares alight though, as investors continue to wait for more detailed progress on the lower-margin memory chips business.
UK retailers have suffered their longest sales losing streak since the pandemic, according to a BDO survey. The data showed another drop in March, despite Easter and Mother’s Day falling in the month. The stagnation can partly be blamed on poor weather, but it’s also a signal of the way spending priorities are shifting. The retail success stories are increasingly to be found in best-of-class offerings, rather than multiple chains in one retail sector being able to benefit. The grab for share of wallets has certainly become more pronounced, and will be watched carefully as we head into earnings season.
