- FTSE off to a strong start
- China hints at open door to US trade talks
- US PMI drops to 48.7 in April, jobs data in focus
- Shell beats first quarter
- Brent crude prices flat at $67 per barrel
- Tariffs take a bite from Apple’s investor sentiment
- NatWest smashes Q1 forecasts
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE ‘s off to a strong start and US futures are also pointing up after yesterday’s gains on Wall Street. Markets were helped by solid earnings from tech giants Meta and Microsoft. Although pre-market trading shows a less warm reception for Apple and Amazon, despite first-quarter beats by both.
Comments by the Chinese authorities suggesting a willingness by both parties to enter trade negotiations also boosted the mood, reflected further by a rally in Asian stocks overnight. Talk is cheap, especially when it’s talk about more talk. But this is a timely reminder of the market’s forward-looking gaze, both in terms of long-term shifts in technology and the economy.
On that front, there were some red flags in US data points. Manufacturing activity contracted further in April with the ISM Purchasing Managers Index slipping to 48.7 from 49.0 in March, reflecting the pressure tariffs are putting on supply chains and input prices. First-time weekly jobless claims also deteriorated, rising 18,000 to 241,000, which was worse than analyst forecasts. There’s more labour market read outs today with non-farm payrolls expected to slow to around 140,000 from 175,000 and unemployment to remain stable at 4.2%.
Shell’s underlying earnings leapt by around [DN1] $2bn in the first quarter to $5.58bn compared to the previous three months. Analysts had been pencilling in a lower number of $5.09bn. The improvement wasn’t all down to operating performance however, with some of the gain explained by lower write offs on exploration wells. Free cash flow was less encouraging, down from $8.7bn to $5.3bn, but that didn’t deter management from launching a further quarterly buyback of $3.5bn. Shell’s one of the best-equipped oil majors to deal with a low-pricing environment and should be able to sustain that level of payouts as long as oil doesn’t dip below $60 for a prolonged period.
The prospect of progress in US China trade has helped Brent Crude prices rebound strongly to over $62 in what’s been a topsy-turvy week for oil traders. On the supply side, the prospect of further tariffs on Iran also buoyed sentiment, but the rise hasn’t been enough to stop prices tracking towards a 5% loss on the week.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Apple’s Tim Cook did his best to reassure investors on last night’s earnings call, but many likely came away still wanting more clarity about what lies beyond June. The challenge, of course, is the unpredictability around tariffs – things are changing so quickly that no-one can really say for sure what’s coming next. And that kind of uncertainty is never ideal for investors.
That said, there were several bright spots. The expected $900 million hit to profit in the upcoming quarter turned out to be smaller than many had feared. Plus, there wasn’t any significant pull-forward in iPhone sales in the quarter just gone, and comments on the call gave the impression Apple hasn’t seen any major tariff impacts on demand just yet. The India story is key as well, and it looks like Apple is progressing faster than expected with its move to shift production of US phones into the region. As far as managing the situation goes, it looks like Apple’s doing a good job.
Still, the lack of visibility into the back half of 2025 is weighing on sentiment with shares currently down around 4%.
NatWest has taken the spotlight this week in banking land, smashing profit expectations thanks to solid top-line growth and tight cost control. Like we’ve seen across the sector, impairments came in a bit higher than expected as the bank plays it safe in case the economic backdrop worsens – but for now, borrowers are holding up well, so there’s no major red flag there.
Both loans and deposits headed in the right direction, with mortgage growth particularly strong as buyers scrambled to get ahead of stamp duty changes. The outlook was upbeat too – NatWest now expects full-year income to land toward the top of its guided range, aligning with where many analysts were already sitting.
All in all, it was a strong set of numbers. Investors can check this quarter off and look ahead to the rest of the year with confidence that NatWest is delivering well.”
