The FTSE 100 is set to follow global stock gains as US stocks post third straight day in the green. Derren Nathan, head of equity research, Hargreaves Lansdown, and Matt Britzman, senior equity analyst, Hargreaves Lansdown comment.
“The FTSE should see a spring in its step this morning after positive movements in European, Asian and North American markets. US stocks closed out a third day in the green as the Trump administration suggested that a trade deal was in sight following talks with South Korea. As ever, details are thin on the ground and there’s every possibility another policy surprise could derail the rally. The President has also rather tastelessly hinted that the gathering of world leaders tomorrow for the funeral of Pope Francis could present another opportunity for trade negotiations.
Chancellor Rachel Reeves gets a chance to make a case for an Anglo-American trade deal today when she meets with Treasury Secretary Scott Bessent, who is reported to be hankering for a reduction in UK tariffs on American cars from 10% to 2.5%.
The tech-heavy Nasdaq Composite had the best of it stateside, rising 2.74%. Google parent Alphabet’s Q1 earnings beat should further boost sentiment today. The shares were marked up 4.6% in after-hours trading, and news that its $75bn capital expenditure plans for this year were unchanged should provide a further tailwind for the sector.
So far this earnings season, some 73.33% of S&P 500 companies have beaten Q1 forecasts only slightly down from the comparative period last year. 80.0% of tech companies that have already reported have beaten forecasts compared to 82.6% with financials posting a 92.0% beat rate up from 86.1%. It’s a starker picture with consumer staples and discretionary consumer stocks. While around 57% of both groups are ahead of analyst projections, that’s sharply down from comparatives in the 70s. Given the clouds forming over the global economy, it’s little surprise the man in the street is closely monitoring spending on day-to-day needs as well as treats. Companies with deep pockets are showing fewer signs of reining in critical investments into future-proofing technology.
However, today’s UK retail sales figures for March show some sign of a pickup in consumer sentiment after rising 0.4% in comparison to February and beating forecasts which had expected a 0.3% decline. Good weather provided a welcome boost for clothing and outdoor retailers but the figures made bleaker reading for food stores who suffered a 1.3% decline.
Brent Crude prices haven’t latched on to the broader market optimism, trading broadly flat at around $67 per barrel and heading for a loss for the week as a whole. Traders continue to show caution as oversupply fears compound uncertainty on the demand side. The prospect of increased OPEC+ supply and easing sanctions on Russia, the world’s third largest oil producer have the potential to trigger a perfect storm.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Alphabet is still the ‘king of search’, and despite a cloud of pessimism hanging over internet stocks ahead of earnings, this was a strong all-around performance. Google Search held on to double-digit growth, even as debates rage on about what the future of search looks like in the age of AI.
Management struck a confident tone on the earnings call. AI-generated overviews are not only gaining traction but, crucially, bringing in ad dollars comparable to traditional queries. That’s a positive signal. Still, it’s worth noting that search growth has been gradually slowing for several quarters. And while this quarter didn’t throw fuel on the bear case, it didn’t extinguish it either. The concern remains that rising stars like ChatGPT could eventually siphon off a meaningful share of users.
One of the bigger headlines from the call was around capital expenditures. AI bulls can breathe easy – Alphabet reaffirmed its commitment to hit the $75 billion capex target for 2025. There were some fears the company might tighten the purse strings given a softer macro backdrop, but instead, the message was clear: demand, particularly in cloud, remains high, and supply is struggling to keep up. That pressure is expected to ease in the back half of the year as more capacity comes online – welcome news for names like Nvidia.
On the flip side, investors hoping for clarity around trade tensions and tariffs were left wanting. There was a distinct lack of insight into how these factors might weigh on ad demand in 2025. For now, Alphabet’s focus remains singular: win the AI race.”
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