- FTSE opens broadly flat as general election announced
- NVIDIA beats expectations and new all-time high expected
- Pfizer announces additional $1.5bn in cost savings
- Brent crude slides on hawkish tone from the Federal Reserve
- Aviva has wind in its sails
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:
“Following a couple of days of moving in reverse, the FTSE 100 just about held its ground at the open, shedding fewer than ten points. Some positivity will be coming from confirmation that a general election is on the way in a matter of weeks. While political upheaval does have the potential to upset markets, the uncertainty around next steps in recent days will have been holding sentiment back. The UK market is also reacting to a slightly more hawkish tone from the Federal Reserve, after the latest minutes showed recent data hadn’t increased their confidence in progress towards inflation targets.
Better news was to be found from NVIDIA, whose shares popped 6% after beating expectations. The group’s expected to ring the bell on a new all-time high, exceeding $1000 per share, when the US market opens. The chip specialist reported a 262% increase in revenue, as AI chip demand reached record levels. While questions about the longevity of NVIDIA’s technical supremacy are being whispered in some corners of the market, the group has raised the bar again with the Blackwell Platform, the world’s most powerful chip. Being at the forefront of the specialised end of this market is a highly enviable place to be, the big question, as ever, remains whether the current market valuation is a fair reflection of the remaining opportunity, or approaching dangerous territory.
US drugmaker, Pfizer has unveiled a new plan to cut expenses by a further $1.5bn by the end of 2027. That’s on top of an existing $4bn cost reduction push. The group has substantial work to do to protect profitability after the sharp decline of Covid related sales. A large source of the cuts will include severance packages. As is always the case with pharmaceuticals, investors will be more interested in the group’s pipeline. Counting the pennies is all well and good, but this doesn’t drive long-term growth.
Brent crude prices have slipped for the fourth trading session in a row. That partly reflects the newly hawkish tone from the Fed, because the reintroduction of interest rate increases, if inflation rises, would hurt demand. Data has also shown that US crude inventories have risen more than expected, which removes some supply pressure.”
Aviva – Matt Britzman, Equity Analyst
“First-quarter trading showed many of Aviva’s strengths. Higher prices are continuing to benefit key areas like motor and home insurance where Aviva is a market leader. It takes some time for these price hikes to earn through, but the benefits are starting to be felt. Elsewhere, the drive to grow its share in health insurance looks positive, helping Aviva offer a complete insurance proposition, it also comes with attractive margins and growth options. The bulk purchase annuity market is also booming and Aviva’s leaning in to get a share of the spoils, albeit with a selective approach to keep margins up. Aviva is a diversified player with fingers in basically all the pies, and while the insurance market more broadly is improving, it looks well placed to benefit.”
