FTSE Reverses Early Losses; Facebook & Optimism over Chinese US Relations Boosts Wall Street

FTSE Reverses Early Losses; Facebook & Optimism over Chinese US Relations Boosts Wall Street

After opening in the red, dragged down by disappointing updates from big names such as Barclays and Shell, the FTSE managed to break onto higher ground boosted in part by a strong start on Wall Street.

Cash flow misses at Shell

The price of Shell’s shares dipped following results that failed to wow investors. Given the impressive rally in the price of oil over the past 6 months, expectation were running high going into the release creating greater opportunity for disappointment. Shell’s shares declined 2% as the firm reported a 42% increase in profits in the first quarter on stronger oil prices but missed the cash flow forecast. The disappointment didn’t rub off onto peer BP, which traded 2% higher on the day.

Barclays solid performance clouded by misconduct fines

Banking stocks were under pressure on Thursday as investors digested a cyber attack in the early hours of the morning on several banks, followed by disappointment from Barclays. Whilst Barclays managed to report a better than expected pre-tax profit in the first quarter, big fines and legal costs from historic misconduct issues clouded the bigger picture for the bank.

Facebook jumps 8%

Wall Street has opened on the front foot lifted by strong earnings from some of the biggest US companies and on improved Chinese US relations. Facebook, had been a particular concern for investors leading up to its results yesterday after the bell in light of the recent data scandal. However, the results showed that investors had nothing to fear. Facebook smashed expectations for earnings and revenue, the share price rallied 8.2%. The S&P tech sector was unsurprisingly a top performer jumping 2.1%.  

Optimism over US – Chinese relations boosts Wall Street & dollar

Not only were US corporate results boosting Wall Street, with 81% of all S&P firms that have reported, beating earnings expectations, but markets were also optimistic of a quick resolution to Chinese US trade issues. After trading close to the flatline for most of the European session, the dollar soared, pulling EUR/USD back to a 3-month low.

EUR/USD to $1.20?

The euro has rallied earlier this afternoon, picking itself up from multi month lows versus the dollar, as investors focused on ECB Draghi’s confident outlook rather than his acknowledgement of recent weakness in the eurozone economy. Draghi’s view that the loss of momentum in the bloc’s economy is temporary helped lift the common currency from $1.2146 to a day’s high of £1.2210. Draghi cited unusual weather conditions, strikes and the timing of Easter as reasons for the slowdown although this is causing some concerns, Draghi & co. believe the strength of the eurozone economy will support inflation converging towards the 2% target. EUR/USD has since sunk on improved Sino – US relations with $1.20 moving into target.