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FTSE 100 outperforms after Kremlin says nyet


Markets in Europe initially started the day on the front foot, taking their cues from another positive Asia session, and residual optimism over Russia-Ukraine peace talks.

This optimism took a knock mid-morning on a statement from the Kremlin that yesterday’s reports on major progress in peace talks were “wrong”, sending the DAX and other related markets lower. Putting to one side that this optimism came about because of comments from Russia’s foreign minister Sergey Lavrov earlier this week, it pays to be sceptical about reports around peace talks. It’s becoming increasingly obvious that Russia’s interest in a negotiated agreement probably doesn’t extend beyond optics. Any ceasefire would require a major climbdown from one side or the other, and with their respective positions still being miles apart, and Russia still targeting civilians, an imminent de-escalation doesn’t look likely at this point. Despite the weakness in Europe, the FTSE 100 has outperformed, helped by Shell and BP due to the rebound in the oil price.

Ocado shares have slid back sharply after the company reported Q1 revenue declined 5.7% against the same period a year ago. This was against a backdrop of strong comparatives, although orders were higher to the tune of 11.6%, while the company said that they were experiencing significant increases in the costs of raw materials, energy, and product cost prices. Against this backdrop its grocery market was 4% lower than a year ago, and while Ocado has said it will have to increase prices, it’s not immediately obvious that this will offset the higher costs of doing business. The business is due to add extra capacity in the form of extra turnover at Purfleet and Andover, with a new facility opening in Canning Town in the spring. In terms of guidance management said it expects the full-year growth rate closer to 10%.  

Cineworld share price has edged higher after reporting a significantly better H2 performance in its preliminary full-year numbers. Revenues rose to $1.8bn, a rise of 112% from last year's $852.3m, while admissions rose by 75.2% to 95.3m. This helped the company post an operating profit of $15.8m, however that’s small comfort when compared to all its other liabilities. Losses after tax came in at $566m, a significant improvement from last year’s $2.65bn, but the outlook still looks challenging despite management's optimism.

It finally appears that Deliveroo may be starting to catch a break. Having seen its shares hit a record low earlier this month, coming within a whisker of falling below 100p, trying to call a bottom has been akin to trying to catch a falling knife these past few months. The main concern for investors has been rising costs, and while Deliveroo has seen orders surge due to its deals with Amazon and Morrisons, the competitive nature of the delivery market, and falls in the share prices of its nearest competitors, like Just Eat hasn’t helped sentiment around the sector

Today’s full-year preliminary results, which have put flesh on the bones of its poorly received Q4 update in January, has seen the share price jump to its highest levels this month, even though nothing much materially has changed. Revenue rose 57% to £1.82bn, while losses increased to £298m from £213m in 2020, while margins slipped to 7.5% from 8.7%, as market and overhead spend rose by 75% to £628.7m. On the guidance the company said it hoped to break even by 2024 on a full year basis and that on medium term Gross Transaction Value (GTV) it expected to grow at circa 20% a year.


US markets opened slightly lower today despite a better-than-expected weekly jobless claims number, and a significant improvement in the latest Philadelphia Fed Business survey for March. The weaker tone has stemmed from the predominantly weaker tone from markets in Europe. This more cautious mood has seen some of yesterday’s bigger gainers give up some of the ground made over the last two days.

After two days of strong gains, we’ve seen a bit of profit taking on a host of Chinese tech stocks with Alibaba, Pinduoduo, Tencent Music and Baidu slide back. 

On the earnings front we’ve got the latest Q3 numbers from FedEx. Since reporting in Q2 the shares have fallen back, which isn’t altogether surprising given that so has pretty much everything else. The big rises in energy prices which we’ve seen the past few weeks are likely to hammer its margins, and while it will probably be able to pass on some of these costs, it won’t be able to pass on all of them. This suggests its full year profit target could well come under threat again. Q3 profits are expected to come in at $4.68c a share.

GameStop is also set to report its latest Q4 numbers. In Q3 the company reported a bigger than expected Q3 loss of $1.39c a share, although revenues beat expectations, coming in at $1.3bn. The company declined to provide an outlook, while also saying they had received a SEC subpoena on its share trading activity. The business is in the process of reorientating its business model towards online and away from bricks and mortar. Expectations are for a Q4 loss of $0.84 a share on revenues of $2.23bn. This is expected to translate into a full year loss of $1.82 a share which although an improvement on last years $3.31 loss, would still suggest the business is a long way of becoming a going concern. Annual revenues for the new fiscal year are for a consensus of $6bn, however with management reluctant to provide guidance it’s not obvious how useful this will be.


The US dollar has underperformed despite yesterday’s Fed rate hike and pledge to look at raising rates six times this year. This may be primarily down to an expectation that the Fed won’t be able to deliver on their guidance. This wouldn’t be unusual given that the dot plots generally don’t tend to be an accurate leading indicator of what the Fed ends up doing. They never have done, and there is some scepticism that the Fed will be able to deliver on its pledge.

The euro has edged higher after the latest EU CPI for February was revised up to a new record high of 5.9%, while ECB governing council member Klaus Knot suggested that the ECB might have to hike rates at least twice by the end of this year. An important caveat to this is that Knot tends to be one of the more hawkish members of the ECB, so his comments aren’t likely to be in the majority. 

The pound slid back from its intraday highs after the Bank of England raised rates by 0.25%, putting the base rate back to where it was pre-pandemic at 0.75%. There was one dissenting voice, that of Job Cunliffe who voted for no change, citing the risks to household incomes from the recent surges in commodity prices. The central bank went on to say that headline inflation could well rise to 8% and possibly higher in Q2, which rather jars with the central bank's dovish tone. In respect of further rate rises, the Bank of England was also less hawkish than the Federal Reserve last night, saying that further modest tightening “might be appropriate”, a significant change from February’s “likely to be appropriate”.

In some respects, this stance probably isn’t surprising given the historically conservative nature of the MPC, but one must question the wisdom of undermining the pound at a time when a weaker pound tends to put upward pressure on prices and make inflation more persistent. Another own goal from the central bank it would seem as it tries to steer a path between keeping a lid on prices and prioritising the economy. Of course, one other factor that is likely to have influenced today’s decision to be cautious is UK fiscal policy and the upcoming tax and NI increases, and uncertainty as to how much of a drag these will turn out to be as we head into the summer. 


Brent crude prices have rebounded today after the Kremlin poured cold water on yesterday’s reports of progress on peace talks with Ukraine. Oil prices have been falling in recent days as supply concerns had diminished in the short term. They appear to have reached a short-term base and are likely to continue to remain choppy as pressure builds on the various hold outs in Europe who are currently resisting a complete ban on Russian crude oil imports. Despite today’s rebound we’re still down on the week. 

Gold prices have rebounded from their lowest levels this month, despite yesterday’s Fed rate decision which implied at least another 6 rate rises this year While yields have firmed, the US dollar has slipped back      


Talk of monetary stimulus by policymakers in Beijing kept Chinese markets very much in focus on Wednesday, leaving the A50 to recover the losses it had accrued since the start of the week and drive significant pockets of interest in local stocks. Volatility on the index moved out to 106% on the day versus 51% on the month as a result.

In terms of single stocks, perhaps it’s no surprise then that the most active here revolved around Hong Kong issuances or those Chinese stocks dual-listed in the US. Again, Pinduoduo was top of the list, printing daily vol of 776% against 333% on the month after its outsized 56% jump on the day, although this merely returns the stock to last week’s valuations. The other point that’s worthy of note is this isn’t a penny share – Pinduoduo has a market cap of some $50billion.

That news from the Federal Reserve yesterday of a quarter-point rate hike with a lot more to come in the months ahead resulted in a brief spike higher for the dollar, but against the Euro, this proved short-lived with the pair resuming the up trend that has been in play since the end of last week. One day vol on EUR/USD advanced to 11.81% as a result, up from 10.68% on the month.

As for commodities, lumber prices spiked higher briefly yesterday, keeping price action here in focus. The bounce was short-lived but daily vol sat at 246% against 205% on the month.

Rounding out with cryptos, bitcoin rallied in the wake of the FOMC statement, driving the digital asset to one-week highs and leaving vol on the legacy coin to advance to 82% on the day, and over 73% on the month, but again the real standout in the asset class is IOTA, with daily vol of 858% being posted.

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