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European markets struggle despite solid results

Despite a deluge of earnings announcements that have been largely positive, European markets have struggled to gain traction today after the losses of yesterday, although we have seen some modest buying in some key areas with consumer staples and financials getting a lift from some solid company updates.


The FTSE100 has lagged largely due to underperformance in energy, and weakness in BP and Shell. 

Barclays share price is the best performer after a positive set of Q1 numbers. Total revenues came in at £7.2bn driven by a strong performance in its investment banking division which saw revenues come in higher than expected at £3.97bn, an increase of 1% from a year ago. FICC was a particular standout, generating £1.79bn, however, equities trading was disappointing at £704m.

The bank also performed well in its consumer division which saw a 47% increase in revenues to £1.3bn. The bank set aside £524m in respect of credit impairment charges.

Even though total operating expenses didn’t change much from last year, with last year’s costs boosted by a £523m impairment, it is notable that operating costs this year increased by 15% to £4.1bn. Net interest margin increased to 3.18%, with the bank saying they expected to see a full-year NIM in excess of 3.2%. Profits attributable to shareholders rose 27% to £1.78bn.

For consumer goods giants the rising cost of living poses significant challenges when it comes to passing on the rising costs of producing the key staples of everyday life. Over the past couple of years, Unilever has so far been able to pass on these rising costs, however, there are signs that the ability to do this might be starting to reach its limits. Q1 revenues managed to beat expectations, coming in at €14.8bn, a rise of 10.5%, however, volume growth slowed slightly. It was notable that the key areas where volume slowed was in home care and nutrition which tend to be less niche, and where consumers tend to have the ability to go for supermarket own brand products.  The company reiterated its full-year revenue growth guidance of 3% to 5%.

AstraZeneca shares have tried to mount a comeback after yesterday’s big sell-off, helped by a strong set of Q1 numbers which has seen the company report total revenues of $10.88bn. The improvement has been driven by a strong performance from its Imfinzi drug, while its Covid-19 vaccine Vaxzervria saw a big fall in revenues to $28m. Pre-tax profits came in at $2.26bn with the company reiterating its full year guidance on revenues and profits. The outperformance of its oncology business still appears to be driving the business forward, with further key trial results over the next few months key to the company achieving and even beating its full year targets.      

Sainsbury has followed in the footsteps of its supermarket peer Tesco by reporting a solid set of full-year numbers, the shares slipping back from 14-month highs. Underlying profit before tax came in at £690m right at the top end of its guidance, down 5% from last year on revenues that were 5.3% higher at £31.49bn. Profits after tax saw a larger fall of 69% to £207m, but these are still 15% above pre-Covid levels. Cost of sales was 7% higher at £29.4bn, up from £27.5bn a year ago.

The main areas of outperformance were grocery which saw annual sales rise 3%, and fuel which saw a rise of 23.4%. Clothing and GM was more of a drag declining 3% year on year.

For 2024 Sainsbury says it expects to repeat and possibly exceed the underlying profit before tax target of this year, guiding between £640m and £700m. The board proposed a final dividend of 9.2p per share. Also trending lower are Legal & General, RELX and Fresnillo as the shares go ex-dividend.


US markets have seen a positive open after US Q1 GDP came in at 1.1%, slowing more than expected although personal consumption rebounded strongly from 1% in Q4 to 3.7%. Slightly more concerning was the rise in core PCE over the quarter from 4.4% to 4.9%. The Fed will be concerned about that, while weekly jobless claims fell to 230k from 246k.

These numbers do little to put paid to the idea that the Fed is done raising rates further and keep the prospect of another 25bps next week very much on the cards, despite the concern over further banking failures as the likelihood increases that First Republic Bank may well follow SVB and Signature Bank into the annals of US banking failures.

The bank is looking to secure some sort of rescue plan, however, as is often the case in these cases, when confidence is lost its very hard to bring back without a significant restructuring, and or recapitalisation.

The Nasdaq 100 is leading US markets higher led by strong gains from Facebook owner Meta Platforms whose shares have got off to a flier after reporting better-than-expected Q1 revenues and profits as well as an upgrade to Q2 guidance.

Q1 revenues came in at $28.1bn, a rise of 3% and easily beating expectations of $26.76bn, while profits came in at $2.20c a share, or $5.71bn, a fall of 24% but also above expectations. Costs and expenses rose by 10% to $21.4bn.

On the more positive side, Q2 revenue guidance was adjusted higher to between $29.5bn to $32bn, while full-year operating expenses are now expected to come in between $86-$90bn, a decline of $5bn, and a sum that includes $3bn to $5bn in restructuring costs. The Reality Labs segment or Metaverse continued to bleed cash, losing just shy of $4bn as revenues fell to $339m.

We’ve also seen Snap and Pinterest push higher on the back of these numbers.

eBay shares are also higher after seeing Q1 revenues of $2.51bn come in ahead of expectations and profits of $1.11c a share. The company also raised Q2 revenue guidance to between $2.47bn and $2.54bn which has also helped sentiment.

After this week’s better-than-expected numbers from Alphabet, Microsoft, and Meta, attention is now set to shift to Amazon after the close, and an expectation that they can repeat the trick of also beating expectations. Given the strong rebound in US retail sales in January you might think that Amazon’s numbers should also beat expectations. Amazon said it expects to deliver between $121bn and $126bn, which was slightly on the lower side of forecasts of $125.5bn. Profits are expected to come in at $0.20c a share.


The Japanese yen will be in focus tomorrow morning when the Bank of Japan meets for the first time since Kazuo Ueda took over as governor. While no changes are expected we might start to see the first signs of a possible shift in policy stance given that national core CPI in Japan is currently at 3.8% and a 40-year high. For the central bank to not acknowledge this fact would be odd given how other central banks are reacting to sticky core prices. This means the scope for a surprise is likely to be quite high and could catch the market unawares.

The US dollar has gained ground and yields have popped higher after the release of today’s US GDP and claims data which showed that inflationary pressures in the US economy remained elevated, while the labour market continues to hold up well.


Brent crude oil prices are trading modestly higher today, above their lows of the month, although below $80 a barrel, helped in some part by the positive company earnings numbers that we’ve seen so far today. Even though US inventories saw a decline of 5m barrels last week, there’s been little evidence thus far that the demand outlook is set to improve, hence the recent price weakness. 

Gold prices had been trading higher in the lead up to this afternoon’s US economic data, however, the bigger than expected increase in US Q1 PCE inflation has pulled prices to the lows of the day, as US 2-year yields popped higher, and back above 4%.  


Earnings news has been driving price action across a number of heavyweight stocks of late, with Alphabet being typical of the trend here. Despite a strong performance in afterhours trade on Tuesday, the stock reversed those gains, driving one day volatility to 74.19% against 40.38% for the month.

Boeing also followed a similar trajectory around its earnings release, resulting in one day vol of 73.45% against 42.03% for the month despite little overall movement in the underlying and the pattern hasn’t been restricted to US stocks either. Healthcare giant GSK accrued losses of close on 4% on Wednesday again in the wake of earnings, pushing daily vol to 56.79% against a one-month print of 31.96%.

Activity in crypto assets sparked back to life yesterday with Bitcoin adding close on 10%. The First Republic Bank story is seen by some as having driven renewed interest here but technical trading ahead of tomorrow’s options expiry on the asset seems to have contributed to ensuring upside has been short-lived. One day vol on BTCUSD stood at 80.87%, up from 40.65% on the month.

And CMC’s proprietary basket of Green Energy stocks was also in focus after the underlying lost close on 10% during the session. Enphase Energy – one of the heavier weighted constituents – presented a mixed bag of earnings along with some weak guidance and the market responded by marking the stock down by almost 25%. Other solar plays also took a hit, resulting in the basket printing daily vol of 85.19% against a one-month equivalent of 46.88%.

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