European stocks outperform, as US stocks slip back

Europe

It’s been a relatively subdued session for European markets today with the DAX posting yet another notional record high, while the FTSE100 looks to be on course for a positive session, despite weakness in mining stocks which is acting as a drag, due to disappointment over the latest China trade numbers.    

BT Group is near the top of the FTSE100 today after Jefferies raised its price target to 260p per share.  

IAG also got an afternoon lift on a report that US and UK airlines had issued a joint plea for a resumption of transatlantic travel between the two countries, led by the CEOs of Delta, United and American Airlines, who argued that the scope was there for the vaccination progress on both sides of the Atlantic should allow a relaxation of the restrictions.   

House builders are amongst the best performers today after the latest Halifax house price survey showed further strong growth on an annualised basis, by 9.5%, while month on month prices rose 1.5%, pushing average prices up to £261,743. The likes of Taylor Wimpey, Persimmon and Barratt Developments are all seeing good gains.

Consumer goods company Reckitt Benckiser has seen its shares rise after the company announced a deal to sell 92% of its infant and child nutrition business in China for $2.2bn to private equity business Primavera Capital Group. The company will still retain an 8% share in the business generating $1.3bn of net cash proceeds. The net proceeds, after costs, will be used to reduce net debt, as well as allow management to concentrate resources on other areas of the business. At its most recent Q1 trading update all of the gains came from the hygiene division which saw a rise of 28.5%. Health and nutrition both saw sharp falls in revenues of 13% and 7% respectively, which is likely to be a concern for when the world starts to come out of the other side of the pandemic.

On the downside Anglo American shares are underperforming after being accused of “greenwashing” its South African thermal coal mines spin-off Thungela Resources, by Boatman Capital. The research group claimed that Thungela’s valuation was zero, accusing Anglo American of not setting aside sufficient capital for its clean up obligations, as well as an optimistic view of the direction of longer-term coal prices. Thungela shares have also plunged, falling over 20%.

US

Having seen US markets finish last week on the up, we are seeing some modest signs of profit taking after weekend comments from US Treasury Secretary Janet Yellen saying that she welcomed the prospect of higher rates if the economy warranted it.

Cruise lines are higher after Norwegian Cruise Lines announced that it would be stepping up its resumption plans for the US market in July, subject to CDC certification.  

Meme mania has continued today with AMC Entertainment rising over 10%, while the likes of GameStop is also higher ahead of this week’s earnings report, which is due on Wednesday.

Moderna shares have hit new record highs after the company filed for emergency use agreement for teenagers in the EU and Canada.

Biogen shares are also in focus after their Alzheimer’s drug was approved for use by the US FDA

Apple shares are slightly weaker ahead of the latest WWDC where the company is expected to announce new hardware and software roadmaps and possible upgrade paths.    

FX

Currency markets are experiencing what can only be described as the market equivalent of watching paint dry, with the US dollar slightly weaker on the day, with the likes of the Norwegian kroner outperforming.    

Commodities

Brent crude prices have maintained their recent resilience, edging above $72 a barrel, with US prices briefly pushing above $70 a barrel. Rising demand expectations along with a weaker US dollar appears to be driving the gains, though we have since started to slip back. While talks between Iran and the rest of the world are set to continue later this week about the relaxation of sanctions, expectations are being dialled back on the likelihood of an imminent return of Iranian supply.

Bitcoin prices are treading water near one-week lows.