The FTSE edged higher in early European trade, after another record close on Wall Street last night. Sentiment remains positive towards global stocks as investors continue to expect a strong stimulus-fuelled and US-led economic recovery. Concerns over policy tightening has eased with major central banks insisting price rises will likely be transitory. That’s what the bulls on Wall Street are betting to hear again from the Fed ahead of the central bank’s much-anticipated policy decision on Wednesday.
Meanwhile, the pace of vaccinations in Europe has picked up sharply. A quarter of adults in the EU have now received at least one dose of a Covid-19 vaccine, according to European Commission President Ursula von der Leyen. That's a remarkable turnaround after supply issues with AstraZeneca and delays from Johnson & Johnson. Germany is stepping up its vaccinations programme. The European economic powerhouse is aiming to open vaccinations to all adults by early June, after a controversial lockdown law went into effect over the weekend. This explains why the euro is holding up well.
In so far as the FTSE is concerned, the U.K. index has been boosted additionally by positive company news this morning as earnings from the likes of BP and HSBC beat expectations. Oil prices have rebounded, helping to support energy names despite concerns about the upsurge in Indian COVID-19 cases and its implications on crude demand.
- BP's first-quarter profit more than tripled from a year-ago period to $2.6 billion. This is thanks mainly to the big oil price gains and bumper revenue from natural gas trading. HSBC also produced better-than-expected profit for the quarter. The lender released $400 million it had set aside to cover pandemic-induced bad loans.
- But it wasn’t all positive news, as Premier-Inn owner Whitbread reported an annual loss of
- about $1.4 billion, sending its shares nearly 2% lower. The pandemic destroyed travel for most of 2020, but the company says it expects a "significant" bounce in leisure demand this summer.
The FTSE remains supported from a technical point of view, as it continues to make higher highs and higher lows. The FTSE’s desire to get back above 6960 this morning following the recent drop means the sellers have lost control again. They had a good chance on Thursday to push the index down further but failed as the 21-day exponential moving average held. Since then, the index has printed positive closes on two consecutive days, eroding the bearish control. So, I reckon the path of least resistance remains to the upside and as such I am expecting to see more gains in the days to come (provided there are no fresh bearish fundamental stimulus)
Source: ThinkMarkets and TradingView.com
Here is what’s coming up
- Earnings: AMD, Microsoft, Google, Visa, Texas Instruments, GE and Starbucks
- Data Aussie CPI, Canadian retail sales
- FOMC statement and press conference
- Earnings: Apple, Facebook, eBay, Qualcomm, Boeing
- Data: German CPI and unemployment change; US Advance GDP estimate and jobless claims
- Earnings: Amazon, Twitter, McDonalds and Mastercard
- Chinese manufacturing PMI
- Eurozone data dump, including CPI and GDP estimates
- Canada monthly GDP
- US PCE Core Price Index, personal income and spending
- Earnings: Alibaba, Exxon Mobil and Chevron
to read our week ahead preview in full, including comments on the US technology sector and the upcoming FOMC meeting.
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