Market Report: global markets eerily calm
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “UK markets are in a holding pattern, with the FTSE 100 patiently waiting for a fresh catalyst to deliver the final push toward new all-time highs. The UK-US trade deal appears to be doing enough to insulate UK markets from excessive Trump-related volatility, though it remains to be seen how long this relative calm will last.
Anyone hoping to see British money transfer company Wise join the FTSE 100 has had their hopes dented this morning, as the company announced it will move its primary listing to the US. A secondary listing will remain in London, but a dual listing makes the company ineligible for FTSE 100 inclusion. Keeping a presence in London makes sense, but it does little to sugarcoat the fact that yet another London-listed tech firm is looking across the Atlantic for better valuations – a story that’s becoming all too familiar.
It was also an uneventful opening bell for broader European markets this morning, as investors are all but certain the European Central Bank will cut rates later today down to 2%. Hopes for easing grew after Eurozone inflation dipped to 1.9% in May, just below the ECB’s target. More cuts are on the cards too, with interest rates expected to fall to 1.5% by the end of the year – low enough to start actively supporting the economy.
Meanwhile, global markets are still cautious due to persistent trade tensions, with President Trump casting doubt on progress with China. US futures are trading broadly flat this morning, with sentiment dented after the latest bout of economic data showed slowing growth in private sector jobs. Strong earnings and a resurgence in the tech trade have been enough to push US markets higher over the past month or so, but there’s still a sense of caution in the air.
Oil prices dropped a touch this morning, weighed down by growing concerns of a global oversupply. Saudi Arabia is pushing for a major increase in oil production and has slashed prices for Asian buyers, signalling weaker demand. At the same time, rising fuel stockpiles in the US and ongoing trade tensions are adding to market uncertainty.“
Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Fevertree’s combination with global beverage giant Molson Coors is progressing well, with strong progress in the US. It’s already become the number one brand in both the tonic and ginger beer categories in the region, and underlying brand performance has remained well ahead of the competition. The transition of Fevertree’s distribution to Molson Coors’ network of distributors in the US is well underway, and if both partners can execute their part of the deal well, there’s an opportunity for significant growth ahead given the vast size of this market.
Tariffs are a short-term headwind, but the costs of UK imports into the US are being shared equally between Fevertree and Molson Coors, and both businesses are working hard to mitigate the impact. Over the longer term, the impact of tariffs should be minimal as onshored US production ramps up. Overall trading has been in line with management expectations and Fevertree’s modest guidance has been reiterated, with the group expecting low single-digit revenue growth in 2025.”