Updates

Stocks slip back, as yields start to edge up again

Traders watching screens

US markets once again saw a decent session yesterday with the Dow, S&P500 and Russell 2000 all setting new record highs, with the Nasdaq once again leading the way. This move higher came in spite of a move higher in US 10-year yields which are once again heading towards 1.6% after President Biden signed off on the latest $1.9trn stimulus plan.

The President went on to say that the first stimulus payments could well hit doormats as soon as this weekend, which may well act as the next shot in the arm for stock markets on the other side of the Atlantic. This may well help explain why stocks are rising in the face of rising yields.  

Asia markets also ended the week on a high, with the Nikkei set to reverse all of the losses of the previous week.

Markets here in Europe appear to be much less enthusiastic, opening slightly lower at the end of what looks set to be a similarly decent week, though the FTSE100 has continued to lag behind, and the FTSE250 looks set to post its best weekly close in over a year.

Burberry shares are higher this morning after an unscheduled positive trading update ahead of its financial year end which comes at the end of the month. The shares hit their highest levels since January last year after the company upgraded their full year guidance. Comparable store retail sales for Q4 are now expected to be around 30% higher compared to the same period a year ago, while group revenues are expected to be down by around 11%.

JD Sports Fashion, which only last month announced that it had raised £464.2m through a share placing to fund more acquisitions, hasn’t wasted any time in doing more deals.

Having already acquired US based DTLR Villa for $495m at around the same time, on top of two other acquisitions in January, this morning the company announced it would be acquiring about 60% of MIG in Poland, which operates around 410 retail stores across the country.

UK housebuilder Berkeley Group this morning announced a trading update for the four months to 28th February, saying it remains on track to deliver a similar profit as last year, of around £504m and forward sales expected to come in above £1.7bn for the end of the financial year. The company said it remains committed to return up to £280m a year to shareholders by way of dividends or buybacks, however markets seem less than impressed sending the shares sharply lower in early trade.

Commercial property owners have been hit hard by the various lockdowns and store closures over the past 12 months, as their tenants' cashflow dried up, and Hammerson has been no different.

Hammerson, which owns some big retail parks including Bicester Village, Birmingham’s Bullring, Brent Cross shopping centre and Croydon’s Centrale has seen its revenues plunge. In August last year the company announced a loss of £1.1bn for the six months to June, as it took £377m of impairment charges, while also announcing that net rental income had fallen 44% to £87.3m.

It also announced a right issue which raised net proceeds of £532m, while the company has also managed to raise £328m by way of disposals. That hasn’t stopped the loss for the year from rising even further, to £1.7bn, with the value of its property portfolio reduced by 24% to £6.33bn.

Net rental income for the year has seen a fall of 48.9% to £157.6m.

AstraZeneca shares have continued to come under pressure on reports that the company is struggling to iron out production issues at some of its European factories. The EU hasn’t been slow in firing a warning shot across the company’s bows after the company said it would only be able to supply less than half the planned number of vaccines in Q2.

Coming on top of reports in some countries that are linking the vaccine to blood clots, the company can’t seem to catch a break when it comes to reports around its vaccine. For now, the shortfalls are more of an optics problem than anything else, as the company comes under criticism for not fulfilling its obligations. The reality is that the EU currently has up to 11.5m unused vaccine doses due to a reluctance to take the vaccine as a result of dubious efficacy claims by some European politicians, which has meant that uptake of the vaccine has struggled to gain traction.  

The pound has shrugged off some pretty poor manufacturing data for January, while GDP for the month came in at -2.9%, which was slightly better than expected. While this morning’s numbers aren’t great, and the trade numbers were disrupted by problems at the ports, either Brexit or Covid-19 related, markets appear to be focusing on the positives.

It’s no surprise the January numbers were disappointing given the lockdowns, with services hit especially hard, however with a vaccine program that is leading the way in Europe, the focus is on the road ahead, and the economic reopening, as opposed to what is in the rear-view mirror.

The US dollar appears to be finishing the week on a slightly stronger note, after three days of losses, as US yields start to edge up again, with equities looking to end the week on a softer note.

US markets look set for a softer open after yesterday’s record-breaking session, with the move higher in yields pressing down on investor enthusiasm as we head towards the weekend. The Dow appears to be holding up better than most due to the predominance of bigger cap stocks.

GameStop's recent run of gains ran out of a bit of steam yesterday after some profit taking kicked in after the shares hit a six-week high. The stock still remains extraordinarily volatile, and is still up over 150% on the month, a remarkable rise for a company that still has very poor fundamentals.

DocuSign shares look set to slip back on the open after reporting a bigger than expected Q4 loss of $0.38c a share. Other than that, revenues came in better than expected, at $431m, while the company also revised up its Q1 revenue estimates to $432m to $436m, which appears to have disappointed some investors, who were expecting a higher revision. Revenue estimates for the full fiscal year 2022, were also revised higher to $1.96bn.

Roblox finished its second full day of trading with another positive session, helped by reports that Cathie Wood’s ARK had taken a stake in the business, buying 500k shares.