FTSE breezes past 7300
|The FTSE 100 is another 30 points higher in early trading, moving back above 7300 for the first time in almost a month.
- No let-up in the market rally
- TUI shares nose-dive
- UK wage growth bodes ill for consumer spending
Markets continue to clock up gains, with the signs of spring weather evidently putting traders into an optimistic mood. There are plenty of reasons to be bearish, including an earnings season that has been so-so at best, plus ongoing geopolitical turmoil and the impending return of the Greek crisis, but once again we have all been reminded of the fact that, sometimes, markets just want to go up. Last year there were plenty of voices (including me) pointing out the potential tailwinds for markets once equity inflows came back in strength, and perhaps we are seeing some of this now. Valuations are stretched, that is certain, but for now this does not seem to matter. And when the dip does arrive, it will provide another great buying opportunity. TUI’s bounce yesterday was just a flash in the pan it seems, with reality reasserting itself in impressive style. Despite the good parts of the update, earnings momentum has been decidedly weak, and with little sign of improvement the reasons to hold the stock are diminishing rapidly.
The UK data blitz continues, with today’s employment and wage figures providing a further blow to the pound. Despite more good job numbers, weakness in wage growth reinforces the message that UK households face a looming income squeeze that bodes ill for consumer spending. Retail sales later this week might hold up well, but the longer-term picture is quite bleak. Ahead of the open, we expect the Dow to start at 20,534, up 30 points from last night’s close.
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