Equities supported by solid start to earnings season

Chris Beauchamp IG

Stock markets have made gains on Thursday morning, taking heart from better global employment news and the good start to the US earnings season.

US banks get the reporting period off on the right foot.
Job picture brightens in Australia and UK.
Deliveroo falls thanks to cautious outlook in Q1 update.

After a positive start to earnings season, yesterday equities have continued their push higher, shrugging off a sudden drop in the second half of the US session yesterday. Employment numbers out of Australia overnight provided further proof of the ability of economies to bounce back once Covid is under control, and with UK job vacancies also recovering there are firm indications that the theme of global reopening is still valid. Still, the main event remains earnings season, with investors hoping that the trend of rebounding corporate income is one that will persist in this reporting period, providing the real foundation for further gains in stock markets.

Lacklustre IPOs are a recurring motif at the moment, after Coinbase’s rather uninspiring market debut yesterday. Those hoping for a rebound in Deliveroo shares after the Q1 update this morning have been disappointed afresh, with the shares taking another turn lower despite the anticipated bounce in order volumes. Crucially, fears about a changing environment thanks to the end of lockdown restrictions appear to be justified, with the firm leaving guidance unchanged and noting that the end of ‘special circumstances would make it hard to issue accurate forecasts for the coming few months.

Ahead of the open, we expect the Dow to start at 33,866, up 136 points from Wednesday’s close.

Author

Chris Beauchamp

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