Market Report: calm has been restored to global markets…for now
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “There’s an overarching sense of calm in the air, perhaps a little unnerving given the storm of political drama we’ve become accustomed too since Tump took office. The FTSE 100 opened flat this morning, and after posting another record high yesterday it’s still riding on a wave of enthusiasm. US inflation data has scope to upset the apple card later today, but for now at least, it’s robust company earnings that are driving markets forward.
Housebuilder Barratt is reaping the rewards of a more stable economy and political landscape, with customer demand bouncing back and strong reservations since January. As a result, Barratt is now targeting the upper end of its profit expectations for the year which, when combined with good execution over the first half, should go down well with investors. Following the acquisition of Redrow, Barratt’s capital plans are in the spotlight, with the company poised to launch a £100mn annual buyback, leveraging improved cash flow and a robust capital position.
Heineken’s fourth quarter results should give investors reason to raise a glass this morning. Sales came in a good clip better than expected with volumes showing some healthy growth, always a good sign. The cherry on top is news of a new €1.5bn buyback and an improved dividend, both better than expected and supported by strong free cash generation. The outlook points to a tough start to the new year but that was largely already expected, and guidance for 4-8% operating profit growth over 2025 is in line with expectations – shares have been trading lower of late, so these results should be taken well.
US markets treaded carefully as traders braced for the crucial January inflation print, with the S&P 500 seeing lower volumes and trading broadly flat last night. Jerome Powell’s testimony stayed true to recent form, reiterating that the Fed was in no rush to bring rates any lower, thanks to a robust labour market and fears around derailing progress on bringing down inflation. All eyes are now on today’s inflation data, with headline CPI expected at 2.9% and core CPI anticipated to dip to 3.1%. These prints have become market moving events, with anything below 3.1% on the core print likely to give markets reason to get more optimistic about cuts this year.
Oil prices have been stopped in their tracks, with brent crude slipping to $76.7 per barrel, snapping a three-day winning streak after a surprising surge in US crude inventories by 9 million barrels. This unexpected spike, far beyond the anticipated 2.8 million, has traders on edge amidst escalating trade tensions and economic uncertainties. However, concerns over Russian and Iranian oil supplies due to sanctions have kept the losses in check.”