- FTSE 100 opens higher after is best streak in 10 months.
- Sticky UK wage growth keeps rate cuts off the cards.
- Prudential delivers as promised.
- Unilever lands on a name for its Ice Cream spinoff.
- US markets rally absent White House interference.
- Oil rises on escalating tensions.
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“The FTSE 100 posted its best winning streak in 10 months yesterday, with its sixth session in a row of gains, and the good times are still coming with another positive open this morning. News that the labour market is cooling rather than collapsing seems to be enough to keep investors in the market.
UK labour market data won’t do the Bank of England any favours, as sticky wage inflation looks like it’s not going away anytime soon. Today’s interest rate decision looks like a pretty easy one to predict; it’s simply too early to take any action. Although employment growth is weak, with a small increase in jobs and a decline in job vacancies, wage growth remains high, particularly in the private sector. It’s a precarious position to be in, with policymakers fearful that a heavy hand could cause inflation to rear its ugly head.
Asian insurance focused Prudential has not only delivered the profit growth it promised but also exceeded expectations with a stronger-than-expected dividend. The Prudential appeal is starting to come through, with Insurance penetration rates in Asia still low and growing demand for long-term savings and protection products. The outlook set a positive tone too, with a 10% jump expected across pretty much every key metric, including the important dividend.
Unilever has landed on a name for its Ice Cream business, with the separation on track for later in the year. The Magnum Ice Cream Company looks a fitting choice, with Magnum one of the leading and most iconic ice cream brands out there. Names might not mean much, but its refreshing to see something sensible after past rebranding efforts with the spreads and tea businesses landing terribly. Unilever’s ongoing turnaround is happening at pace, and with a newly minted CEO now taking on the reins, there’s plenty to like about where the consumer goods giant is heading.
It’s amazing to see what can happen when markets are allowed to go about their daily business, uninterrupted by White House drama. US stocks put in a strong showing, led by tech names that have been at the epicentre of the recent sell-off. US rates were held steady and despite growth expectations coming down, the arguably oversold market reacted positively to news that the Fed is going to slow the pace of balance sheet run-off. Put in other words, instead of selling off bonds quickly, they’re doing it more gradually. It’s far from a full-on stimulus measure, but the mere indication of some support from the Fed has been enough to get stock buyers back in the market, with futures pointing to another positive open later today.
Brent crude oil rose above $71 per barrel this morning due to supply risks from escalating Middle East tensions, including Israel’s new Gaza offensive and US strikes on Houthi targets in Yemen. There was also support from government data that showed a significant drop in fuel supplies, despite a larger-than-expected rise in crude stockpiles
