FTSE 100 falls back, but Unilever (ULVR Stock) gains ground

A more cautious view prevails across markets this morning, at least in the short-term, as post-earnings disappointment and Evergrande worries knock back sentiment.

• Stocks drop back on earnings and China news.

• Brief interlude before rally resumes.

• Unilever looks for a way out of its rocky patch.

Stock markets have edged back down in early trading, as some of the bullishness from earlier in the week fades due to caution in the wake of Tesla and IBM numbers last night, plus a resurgence of Evergrande worries. Of course, we will go into the US session with the Dow close to a record high, and with earnings season coming in nicely the overall atmosphere lies firmly within the risk-on camp. We will likely see the overnight weakness in indices reversed, and the Dow hit a new record high by the end of the week. Investors will watch the non-participation of European indices in the rally with no little concern, since aside from the FTSE MIB the continental markets have shown a distinct lack of enthusiasm of late. Aside from earnings, investors will be waiting for tomorrow’s flash PMI figures from around the globe; so long as these broadly stick in expansion territory then the general positive outlook will remain in place. 

Unilever investors will hope today marks the start of a recovery after months of declines of late, and a generally unimpressive performance over the past year. If it can continue to increase prices without much of a hit to sales, as today’s figures seem to indicate, then a way of out the mire seems possible. In a growing economy, with consumers beginning to see higher wages, even a relatively staid firm like Unilever should benefit. Of course, a look at the longer-term, which shows a tripling of the share price since 2009, shows that we are probably just going through a tough period, which should reverse in due course. 

Ahead of the open, we expect the Dow to start at 35,496, down 113 points from Wednesday’s close.