Earnings from Home Depot and Walmart highlight the spike in spending off the back of government stimulus checks. The market outlook has been largely positive, with dollar weakness and moderate gains on the equity markets. Meanwhile, the pound has gained ground after an impressive jobs report.

  • Nasdaq outperforms as markets gain ground
  • Home Depot and Walmart highlight impressive US retail sales activity
  • GBP on the rise after continued improvements in UK employment

European markets have posted marginal gains, as tech stocks outperform their value counterparts in the face of fading treasury yields. For the most part we have seen a positive approach to risk today, with a weakening dollar, stronger commodities, and rising equity markets. The Nasdaq has been the days outperformer, with the likes of Amazon helping to drive that resurgence. Despite this week marking the last embers of US earnings season, todays earnings data from Walmart and Home Depot did provide a welcome update on consumer activity in the first quarter. The huge jump in sales across both Home Depot and Walmart provides a timely reminder that despite the pandemic, we have seen major increases in spending across a while range of products and services. Home improvement stocks have enjoyed a bountiful year as lockdown restrictions shift spending habits towards DIY, but todays earnings have shown how stimulus checks have helped lift demand across the board for retailers. Understandably this has helped lift the likes of Amazon, with the impressive build-up in savings seen throughout 2020 expected to ultimately resolve in a jump in sales as Covid restrictions drop-off.

The pound is closing in on a three-year high, with improved jobs data lifting sentiment despite recent fears over delays to the 21 June lockdown easing. The continued decline in UK claimants came as a surprise this morning, with the unemployment rate also falling in response. The easing of Covid restrictions has helped lift the number of people on company payrolls last month, with roughly 97,000 more people back in payrolled employment compared with March. From a UK perspective, the recent fears that we could see the 21 June end to lockdown restrictions pushed back have been allayed somewhat, with Boris Johnson more likely to favour local restrictions over nationwide policy. The growth in the Indian strain certainly does raise questions given the apparent higher rate of transmission. However, markets have been appeased somewhat by claims that the vaccines appear to be effective against this latest form of the virus.

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