Market report: US inflation back in focus as Wall Street wavers
Derren Nathan, head of equity research, Hargreaves Lansdown: “As largely expected, the UK unemployment figure has come in at 4.3%, slightly up from last months figure of 4.2%. That’s a considerable rise from the 3.8% seen at the end of 2023, and whilst rising joblessness is unlikely to help the government win over voters in the run-up to a general election, it does provide further hope that UK interest rate cuts aren’t too far over the horizon. However hotter than expected wage growth does complicate that picture. Including bonuses average pay was up by 5.7% against expectations of 5.5%.
The FTSE 100 has opened flat after a small retreat on Monday from its all-time high. Anglo American was one of yesterday’s bigger fallers, down 2.4%, after news emerged that a revised all-share takeover proposal by suitor BHP, had been unanimously rejected by Anglo’s Board. This may not be the last twist in this tale, with rival Glencore also thought to be casting an eye over Anglo’s diverse mining properties. Anglo won’t go down without a fight though and has set out its strategic vision this morning to focus on world class assets in copper, premium iron ore and crop nutrients, with plans afoot to exit or demerge coal mining, nickel, platinum and the iconic De Beers diamond operations.
Shares in budget bakery Group Greggs have nudged up slightly following a trading update.
Matt Britzman, equity analyst, Hargreaves Lansdown: “Greggs is doing what it needs to. Like-for-like sales growth of 7.4% in the first 19 weeks does reflect a slight slowdown from the early few weeks, but nothing for investors to worry about. Management called out a tough trading environment with reduced footfall, probably a product of the horrendously wet conditions plaguing the UK in the early parts of the year. The key takeaway is volume growth remains, driven by the usual suspects of improving delivery options, longer opening hours and improved use of the Greggs app.”
On Wall Street markets closed out a relatively uninspiring session breaking the latest winning streak. A survey by the New York Federal Reserve showed that consumer expectations for inflation are on the rise. The focus now turns to hard data, with producer prices expected to show a monthly increase of 0.3% later today. Tomorrow, it’s the turn of the consumer price index which is forecast to have risen by 0.4%. Talk in the US is slowly gravitating from ‘when will rates be cut’ to ‘could they rise again’? If the hawks case is strengthened this week, investor nerves could be set on edge.
One stock that’s unlikely to be highly correlated to economic data or indeed any rational thought process, is meme stock favourite GameStop. The shares surged 74% after influencer Keith Gill, aka “Roaring Kitty,” posted on social media accounts after a three-year pause. None of the posts even mentioned GameStop and, given that the video game retailer is forecast to make losses this year, anybody jumping on that train needs to realise its most likely heading for a crash.
Brent Crude is holding onto yesterdays modest gains, with a price near to $83.5 per barrel. US crude inventories are thought to have dipped last week, and wildfires in Alberta threaten to disrupt production in Canada’s oil sands heartland. On the demand front the American Automobile Association now expects travel over this month’s Memorial Day holiday to be the highest since 2005.”
