- FTSE 100 opens in the green ahead of ECB rate decision.
- Nvidia surpasses Apple as world’s second largest company.
- Fevertree outlines full year expectations.
- Boeing Starliner successfully sends crew to space.
- Oil price rises over $79.
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown:
“The FTSE 100 has a spring in its step this morning, after taking its cue from Wall Street, where technology stocks rose sharply overnight. Closer to home, there’s renewed optimism that the ECB will cut interest rates in its decision later today, which is adding additional enthusiasm into equities. The lingering question, however, is what the interest rate roadmap looks like after June. Even if a cut arrives today, markets will be more interested in understanding expectations for the rest of the year.
One success story has buoyed markets more than others – news that AI chipmaker Nvidia has shot to record highs, and stolen Apple’s crown as the world’s second most valuable company. Having crossed the psychologically important $3trn line, Nvidia has a lot to live up to. Its recently announced stock split may help encourage retail investors, but does little to change the investment case. That still rests on the group’s cutting edge, and market leading products and hugely dominant market share. Nvidia relies on a small number of customers for the bulk of its revenue, but these are high calibre names, who have a lot to lose by dabbling with lesser proved chip technology. The speck of threat on the horizon remains the possibility of regulatory pressure, including anti-trust probes into the AI sector.
Fevertree’s shares have risen 2.5%, continuing this year’s rally, after saying full year expectations remain intact. While the brief statement lacked much fizz, there is relief to see market share gains are being won, including in important growth regions outside the UK. The valuation is still sharply down on a one-year view, as investors remain uncertain about the exact trajectory of growth, as well as Fevertree’s ability to grow and maintain a meaningful chunk of the mixer market in the US.
Boeing has put the troublesome headlines to bed for now after successfully flying its first crew of astronauts to space from Florida. The Starliner capsule delivered the crew to the international Space Station, in a feat that shows Boeing is serious about going head-to-head with Elon Musk’s SpaceX. The space business offers a helpful future revenue diversifier, but mainstream travel to the stars remains a moonshot. It’s one investors have renewed focus on, following Boeing’s highly publicised safety failings in recent times, which has shifted preference to other manufacturers in the traditional business.
The likelihood of the Fed lowering borrowing costs in September is now at 69%, following weaker jobs data, which has helped the price of Brent crude rise above $79. That said, the price remains subdued overall, as demand concerns related to slowing economies remain front and centre.”
