- FTSE 100 continues its gains despite disappointing US CPI data
- AstraZeneca hikes divided on day of divisive executive pay vote
- Oil hits $90 as Middle East conflict threatens to escalate
- Delta airlines expects best-ever second quarter as travel demand booms
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown:
“The FTSE 100 has continued to climb, led by yesterday’s gains from Tesco and HSBC. The commodity-heavy index also continues to benefit from rising prices, especially oil and gold. The upbeat mood is despite volatile trading in the US following hotter-than-expected CPI data. Hopes for interest rate cuts across the pond have been dramatically shunted to September, from June. There’s also a growing number of voices that believe no cuts at all will happen this year. The consumer price index rose 3.5% in March, which marked an acceleration from February. The data simply didn’t give the much-needed vote of confidence for policymakers to start loosening conditions just yet.
The main UK corporate news story today comes from pharmaceutical giant AstraZeneca, who have hiked their dividend by 7% on the same day as a key vote on leadership remuneration. Shareholders won’t be blind to the fact that this is a barely disguised sweetener, but it may quell appetites enough to get the divisive package through. The bigger picture for Astra still centres on the work it does on rarer and more complex treatments – dominating this area of the market takes very deep pockets, and that doesn’t appear to be under threat.
The oil price has come under renewed pressure as conflict in the Middle East threatens to escalate, which would disrupt supply. US intelligence officials have warned of an imminent attack from Iran. US inventories of oil continue to build higher than expected, helping to remove some heat from the price. Brent crude is trading at $90.4 a barrel.
US airline Delta has reported it expects the highest second-quarter revenue in its history, following strong demand for spring and summer travel. The group highlighted that travel remains a priority for customers, despite ongoing inflationary pressures. Interestingly, it’s increasing corporate travel which has also helped the airline’s prospects take off. These trends have far-reaching implications including here in the UK, where the likes of Rolls Royce, who depends on long-haul travel remaining robust, will be monitoring these trends closely. Travel’s renewed importance since the pandemic doesn’t show signs of easing, as people reassess their priorities. That means we’ve seen holidays treated as must-haves rather than nice-to-haves by large cohorts of global populations in recent times.
