Market Report: European markets open higher with Central Bank moves in focus
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “The FTSE 100 has opened a touch higher this morning, with investors keeping a close eye on interest rate dynamics across the globe. The European Central Bank is widely tipped to trim rates by 25 basis points and update its growth and inflation forecasts. Over in Switzerland, another rate cut is also on the cards, while in the US, inflation data met expectations, paving the way for the Fed to cut interest rates next week.
US markets had their best day since the election, with tech stocks stealing the spotlight after inflation data practically locked in a rate cut next week. Tesla hit a new all-time high, as investors revved up their confidence in a self-driving future that’s looking more like a destination than a dream. All eyes are on 2025 for Elon Musk and team, with new car models, self-driving breakthroughs, and a friendlier White House providing some serious tailwinds.
Alphabet unveiled Gemini 2.0 yesterday, its shiny new family of AI models that promises to be faster and smarter. Alphabet sees these models as a step toward the next chapter in language models where they handle tasks on your behalf, with highlights like better multitasking, complex reasoning, and tool use. While it’s still early days for this tech, investors liked what they saw from a name that’s sometimes seen as being behind in the AI race.
Brent crude oil moved higher this morning to around $73.8 per barrel, adding to its recent gains as worries over tight global supplies heated up. US plans to crack down on Russian and Iranian activities, coupled with fresh EU sanctions, kept supply fears in focus. But the rally was tempered by higher-than-expected US fuel stockpiles and OPEC’s cautious tone, trimming its oil demand outlook for 2024 and 2025. Even so, hopes for China’s economic stimulus and a possible Fed rate cut had traders eyeing brighter days ahead for energy demand.”
The author holds shares in Tesla.
Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Compared to recent history, Currys had an electric start to the year, with both first-half revenue and profit moving higher. While 2% revenue growth isn’t breakneck speed by any stretch, declines in the Nordics mask 6% growth in the UK and Ireland, as both Online and Store channels charged higher. The positive momentum and continued recovery indicate a potential easing market headwinds and there’s now cautious optimism for the future.
Market share gains in both major regions are to be applauded. The focus on margins is beginning to bear fruit, with profits jumping higher, albeit from a very low base. Services like device repair, insurance and cloud backup have been a major help on this front as they’re typically higher-margin activities. They also bring a little more revenue visibility to a business model that remains at the mercy of ups and downs in consumer sentiment and one-off purchases of big-ticket items like laptops, TV’s and white goods.
Then there are potential tailwinds outside of Curry’s control. The integration of Artificial Intelligence into consumer electronics may herald the beginning of an upgrade cycle. So far, this is playing out well, but the first-half numbers only run to late October. The real litmus test will be the next set of results, which will highlight demand over the all-important Christmas period.
While shoots of growth have emerged in the UK & Ireland, performance in the Nordics region remains a real thorn in the group’s side. Curry’s is doing about as well as it can here in a tough consumer environment here, keeping on top of costs and even edging market share gains without racing to the bottom in a price war. But the Nordic market is in a trough, and the timing of a recovery is out of Curry’s control. Until that occurs, markets are unlikely to get too excited.”
