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European stocks finish a turbulent week on the up

FTSE100 treading water above 7,000

European stocks have continued to edge higher after a rollercoaster week which saw the FTSE 100 hit a one-week high and a six-day low in the space of 24 hours, while the DAX hit a record high at the start of the week, before a 3.5% round trip to the downside and back.

In comparison, today's price action has been more subdued as more positive economic data feeds into a narrative of optimism as looser restrictions prompt improvements in economic activity throughout April and May. The FTSE 100 has once again underperformed today though it does look like we will finish the week above 7,000.

Today’s flash PMIs for May from Germany and France saw decent increases in the services components, while the UK numbers also pointed to a Q2 economic rebound that continues to gain traction. The latest UK composite PMI hit a record high, along with prices paid, showing that while prices are looking a little on the hot side, they aren’t for now acting as a brake on the reopening trade.

April retail sales also saw a strong rebound, rising 9.2% with clothing sales rising 69.4% compared to March as consumers looked to replenish their summer wardrobes, while rising fuel sales pointed to improving mobility, as people returned to work, and started to move around more.


There was good news for AstraZeneca today after the Japanese regulator signed off on its Covid-19 vaccine for emergency use, with no age restrictions on who can be given it.

On the downside Kingfisher has continued to struggle despite some decent numbers earlier this week. Having done well out of the various lockdowns there appears to be a belief that it will struggle to maintain the level of sales once people start to leave their houses and go back to work. While that may be true, it’s still unlikely to alter consumer enthusiasm for doing DIY and other home improvements.

British Land shares are also lower ahead of the release of their full-year numbers next week, which are expected to show 82% of total rent had been collected for FY21, with offices at 99% and retail at 70%.

On the upside, after seeing a dip yesterday on the O2 Virgin Media merger approval news, BT Group is among the better performers hitting a 52-week high as it gets a lift from today’s positive UK economic numbers.

Shares that have done well from lockdowns are lagging today, with Just Eat Takeway and Ocado on the back foot, while the reopeners are finding life easier, with Premier Inn owner Whitbread on the up. BP and Royal Dutch Shell are also on the up as oil prices rebound from their lows of the week.

Swiss luxury good brand Richemont has seen its shares push to a record high today after reporting full-year earnings ahead of expectations, helped by a big increase in demand from Asia and the Middle East.


US markets have picked up where they left off yesterday, opening higher with the latest services PMI numbers for May giving sentiment an added boost, coming in at a record 70.1, as investors look to try and turn what looked as if it might be a negative week at one stage this week, into a positive one.

Nvidia shares are amongst the better performers ahead of next week's Q1 numbers, after they announced a 4 for 1 stock split.

Oatly is also trading well on its first full day of trading as a listed company, looking to make another day of solid gains as investors speculate as to whether it can go the same way as Beyond Meat which saw spectacular gains after it went public. In terms of news flow, and media mentions the company is seeing plenty of media coverage which appears to be helping. The company raised $1.4bn which given reports of shortages of its product in food stores may well be needed to spend on boosting production capacity. Unless this is addressed then for all of its current popularity consumers may go elsewhere.      


The pound has seen a decent performance this week rising close to its best levels this year against the US dollar as optimism grows about the resilience of the UK economy as lockdown measures continue to get eased. The Norwegian krone has been the worst performer on the back of weaker oil prices and some recent disappointing economic data.

The US dollar looks set for another decline, despite today’s bumper services PMI pulling it off its four-month lows, as we look ahead to next week’s April core PCE deflator numbers, which is the Federal Reserve’s key inflation measuring benchmark, and which is expected to jump from 1.8% in March to 3% in April, which would be the highest level since the 1990’s.


Copper prices look set for their second successive weekly decline, after Chinese regulators expressed concern about excessive gains in commodity prices, in comments released earlier this week. Over the past 12 months the price of copper has doubled as a consequence of higher demand due to its use in solar and battery technology for electric vehicles as economies around the world move towards a greener agenda, and away from fossil fuels.

Brent crude prices also look set for a weekly decline on the premise that Iranian supply could find its way back on to the market. EU officials have expressed confidence that a deal can be reached in anticipation that the US could ease some of the sanctions on Iran. Iranian President Rouhani has also claimed that an agreement has been reached on a number of key issues, although some other smaller issues could be a sticking point.

Cryptocurrencies have helped drive volatility this week, at one-point Ethereum fell 40%, while bitcoin also fell heavily, down 25% at one stage after Chinese regulators took aim at it by banning its use for payments. We’ve since seen a decent recovery however volatility looks set to continue as more and more people use leverage to gain exposure to it.

Gold looks set to post its third week of gains, helped by a weaker US dollar as well as a recent softening in US 10-year yields, hitting its highest level in four months.   

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