Full steam ahead for equities

Equities have resumed their march higher, while UK wage data points towards a brighter period for consumer spending.

• UK wages outstrip inflation

• ABF supported by Primark numbers

• Netflix numbers hark back to the good old days

Today’s market news is brought to you by the phrase ‘despite Brexit’. Despite Brexit, the pound is now at its highest level since June 2016, and with wages on the up, also despite the B-word, things are looking rosier for the UK economy. Of course, as the pound rises, inflation starts to weaken, so while a May hike from the Bank of England looks a bit more likely, perhaps the rationale for further increases will diminish as the year goes on. One swallow does not a summer make, of course, but good news is certainly welcome. The update on wages is an encouraging one for retailers, and there was further good news for the sector as Associated British Foods maintained its sunny expectations for Primark despite weather-related disruption over the past few months. Investors appear to be giving the group a free pass on the numbers this morning, reasoning that better weather and an improvement in consumer spending could help cushion performance in coming months, even if some will continue to wonder why the firm bothers to hold on to its underperforming sugar business.

Netflix’s numbers last night helped to bolster risk sentiment, acting as a pleasant throwback to the heady days of 2017, when all seemed to be rosy. The group continues to find new subscribers, allowing it to remain in the ‘growth stock’ end of the market, permitting investors to ignore its growing debt pile. Continued easing of geopolitical tensions has also aided risk appetite, but with Goldman Sachs earnings and a host of Fed speakers on the calendar too, we can look forward to a busy day. Ahead of the open, we expect the Dow to start at 24,702, 129 points higher from Monday’s close.