Garry White, chief investment commentator, looks at the market-moving events that have shaped the UK equity markets this week (30 April to 4 May 2018).

Two chief executives made embarrassing gaffes this week – ones these highly remunerated men should have been able to avoid. Billionaire and Tesla chief Elon Musk saw shares in the electric vehicle make slump after he got shirty with Wall Street analysts asking him some difficulty questions. Back in the UK, the shine was taken off J Sainsbury shock merger announcement with Asda after Mike Coupe, chief executive of the former, was caught humming the show tune “Were in the Money” between TV interviews. Shareholders remain hopeful they were in his thoughts too.

The FTSE 100 moved 0.3% lower over the week by mid-session on Friday.

Economics

Growth in the key UK services sector remained subdued last month, accelerating only slightly following Marchs hit from the “Beast from the East” weather system. The latest IHS Markit/CIPS UK services index increased to 52.8 in April, up from a 20-month low of 51.7 in the previous month.

The US Federal Reserve held interest rates steady and acknowledged rising inflation, but did not seem overly concerned that prices would rise too fast. The move had been widely expected and the market now expected the central bank to increase rates in June. The dollar continued with its recent period of strength, hitting its strongest level in 2018 against a basket of currencies.

In news that would have pleased President Trump, the US trade deficit narrowed sharply in March as exports increased to a record high amid a surge in deliveries of commercial aircraft and soybeans.

Data from the Eurozone was in line with expectations. GDP in the single-currency bloc rose 0.4% quarter-on-quarter in the first three months of 2017. This was a slight deceleration.

Geopolitics

As worries over South Korean eased, the focus of geopolitical concerns moved to Iran President Trump's is likely to pull out of the nuclear deal between Iran and world powers over its nuclear plans.

John Redwood, Charles Stanleys chief global strategist, looks at US President Donald Trumps current trade and international strategy here.

Fixed income

Insurer Aviva announced it would pay £14m in compensation for the recent preference share debacle that was a major blow for income investors. To discover the details click here.

Energy

After jumping on Monday on Iranian supply concerns, the price of Brent crude futures eased. The price was down 1.6% over the week by mid-session on Friday to trade at around $73.50 a barrel.

It was a good week for BP shares after it posted a stronger-than-expected first quarter profit and hinted at a possible dividend increase.

Technology

Worries that smartphone sales had peaked hit Apple shares ahead of its second-quarter figures. However, the numbers were reassuring – and it unveiled the largest cash return in corporate history. Filings from Warren Buffetts Berkshire Hathaway also showed that the investment vehicle had bought 73 million shares in the iPhone maker in the first-quarter technology wobble. For more, click here.

Elon Musk was dismissive of analysts concerns about profitability on the media call following Teslas latest quarterly results – but should investors be concerned about the rate the electric vehicle maker is burning cash? Click here for more.

Recently-listed music streaming service Spotify posted a disappointing set of maiden numbers, sending its shares down by almost 10%. The group reported that it had reached 75 million premium users, which fell short of market expectations. For the background to its IPO, click here.

Shares in photo-sharing company Snap, which owns the Snapchat app, hit a record low after its quarterly results disappointed and prompted its shares to fall by around a fifth. A redesign if the app resulted in disappointing user data.

Shares in UK-listed Inmarsat jumped following a period of extended weakness after the satellite operator reported better-than-expected growth in its airline business, which provide on-board WiFi for plane passengers.

Mining and commodities

Following recent strength in commodity markets, Glencore expects 2018 to be a good year for its trading business, as it narrowed earnings guidance to the top half of its previous expectations of between $2.2bn and $3.2bn.

Supermarkets

J Sainsbury and Walmart-owned Asda surprised almost everyone by announcing a proposed £13bn merger, which could mean lower prices for consumers. Together, an enlarged grocer will be the biggest player in the market. This follows Tescos £4bn purchaser of Booker, which consolidated its market share.

Ocado shares rose after the company announced another international deal. The company is partnering exclusively in Sweden with ICA to launch its online grocery services. Shares in the company, which likes to describe itself as a technology business rather than a grocer, are up 42% so far this year.

Consumer

Shares in car dealership Pendragon fell after it said that new car revenue in the first quarter dropped by 13.3%, worse than 12.4% fall in national new vehicle registrations.

However, new UK car registrations rose 10% in April following 12 successive months of decline. But the industry was keen to caution that the surge was mainly as a result of last years figure being abnormally low as new vehicle excise rules “pulled forward” sales into the first three months of the year.

Financials

HSBC saw pre-tax profits fall 4% in the first three months of 2018, as higher costs more than eroded increased revenue. However, there was some good news for investors in the form of a $2bn share buyback.

Media

The planned tie-up of the Daily Mirror owner and the Express newspaper titles is to face a public interest probe by the media watchdog following government intervention. Trinity Mirror is paying £126.7m for privately-held Northern & Shell, whose titles include the Daily Express and Daily Star. The news came amid details of falling sales at Trinity in the first four months of the year, as like-for-like revenues fell 9%. Management blamed the poor weather.

Healthcare

Artificial knee and wound care group Smith & Nephew warned that changes to US medical insurance and spending cuts in Europe meant revenues would be lower than expected this year.

Travel

Norwegian Air Shuttle confirmed it had rejected two separate takeover proposals from British Airways owner IAG Group.

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CityAM

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Garry White, chief investment commentator, looks at the market-moving events that have shaped the UK equity markets this week (30 April to 4 May 2018).

Two chief executives made embarrassing gaffes this week – ones these highly remunerated men should have been able to avoid. Billionaire and Tesla chief Elon Musk saw shares in the electric vehicle make slump after he got shirty with Wall Street analysts asking him some difficulty questions. Back in the UK, the shine was taken off J Sainsbury shock merger announcement with Asda after Mike Coupe, chief executive of the former, was caught humming the show tune “Were in the Money” between TV interviews. Shareholders remain hopeful they were in his thoughts too.

The FTSE 100 moved 0.3% lower over the week by mid-session on Friday.

Economics

Growth in the key UK services sector remained subdued last month, accelerating only slightly following Marchs hit from the “Beast from the East” weather system. The latest IHS Markit/CIPS UK services index increased to 52.8 in April, up from a 20-month low of 51.7 in the previous month.

The US Federal Reserve held interest rates steady and acknowledged rising inflation, but did not seem overly concerned that prices would rise too fast. The move had been widely expected and the market now expected the central bank to increase rates in June. The dollar continued with its recent period of strength, hitting its strongest level in 2018 against a basket of currencies.

In news that would have pleased President Trump, the US trade deficit narrowed sharply in March as exports increased to a record high amid a surge in deliveries of commercial aircraft and soybeans.

Data from the Eurozone was in line with expectations. GDP in the single-currency bloc rose 0.4% quarter-on-quarter in the first three months of 2017. This was a slight deceleration. (more…)