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Market Moves 30th April 2024

Watch our latest Market Moves, providing a round-up of the market movements and the global investment outlook for the week beginning 29th April 2024.

| 6 min watch

This week Chief Investment Officer, Patrick Farrell, reflects on market movements from the past week, provides an outlook on the economy more generally, and considers the implications of what is unfolding

Transcript:

Erica Whyte:
Thanks for joining us here for Market Moves, My name is Erica Whyte alongside our chief investment officer, Patrick Farrell, here to break down the market moving events that went on this past week, namely good news for the UK as the FTSE100 reached new all-time peaks and meanwhile the higher for a longer stance is looking high and it's looking long.

But what's the impact on markets? Well, that is what Patrick is here to share with us. Hi Patrick, how are you?

Patrick Farrell:
Good, Erica, how are you?

Erica Whyte:
What was moving markets this past week, what can you share with us?

Patrick Farrell:
Well, we've started off on the earnings season.

Erica Whyte:
Yep, exciting time.

Patrick Farrell:
Yes. So all Q1 report basically starting to come through and there's definitely been some hits and there's definitely been some misses on that. So it's been a very interesting reporting season so far. I think we're probably about 20% to 25% of the way through the S&P 500 at this point. But some of the news that's been coming out on some of those UK stocks have been quite interesting. And there's a lot of M&A activity. It's starting to surface and this is not minor stuff. This is BHP looking at Anglo American for, you know, pretty much 30 odd billion pounds. So these are pretty big deals that have basically started to sort of surface and they are providing the support that the UK market has been desperately looking for for a quite a while.

Erica Whyte:
Very desperately. What are the impacts of these moves that you're seeing

Patrick Farrell:
Well, I think we're we're looking at the earnings results. One of the sort of key things has been even though companies have been able to deliver on their earnings expectations, they might have been a little bit lax or maybe not so specific in terms of the outlook and the stock has been smashed. So what investors are looking for at this particular point is, I think, a little bit of cost discipline.

So investors understand the companies that are in some of these themes, let's say, I think it's going to take a while for it to manifest itself. Of course, you know, this is not yeah, we've got no idea. And you know, anyone who's been in the in the in the sort of throes for the last 15 years, they're not all of a sudden going to come out with massive quarterly reports to see the benefits of it. It is going to take time. It is going to require money, it's going to require OpEx, CapEx. So it's going to be in a situation where companies that have a strategy and have a discipline to stick to that strategy is what investors are going to look for. So yeah, the example around Meta.

Erica Whyte:
Yeah, a lot of noise around that.

Patrick Farrell:
When it did come out, investors just thought, Zuckerberg's just going to go on another spending spree and all that discipline which he's been rewarded for is all going to go out the window. And so the stock down 15% after some pretty good earnings results. So yeah, we're in that sort of situation at the moment. You know that companies are looking for the evidence in terms of where the Q1 results have been, but they're also looking for the discipline and the strategy for what it's going to look like in the future.

I think that's one of the sort of key things in terms of some of the economic data. You know, it's been fairly mixed. You know, we've had some some good growth type indicators, but not great. We've had still some inflation numbers that have been a little bit on the upside. And I think the worrying thing for the Fed and the Fed obviously this week, so we end up sort of seeing what they're going to do more, particularly what they're going to say and what sort of discussions they're going to have. But expectations have now pushed all the way to the end of the year. We don't have a full rate cut priced into the market for the US until November. So whereas the ECB, the Bank of England, they've definitely got the evidence to start to sort of think about cutting rates. The ECB No question. And I think you'll see the ECB cut rates in June. You know, I think it'd be very quickly followed by what happens at the Bank of England. So let's wait and see on that one. But you will start to see a disconnect coming through from the key central banks.

Erica Whyte:
Looking ahead, what could all of this mean?

Patrick Farrell:
Well, investors have a lot to sort of digest. I think, you know, the once the once we're through a little bit more of the earnings season, the it'll the focus will start back on some of the economic and the central bank information, but also the tensions that are still building very much in the middle East. I think that that will still cause some concerns and some caution. And I don't necessarily feel that the market is just going to sail ahead into the sunset. I think the we are in for some pretty choppy conditions and that who knows what that's going to be caused by, because I think I think this particular earnings season is going to actually highlight where some of the good news has come through.

But future growth is going to be a little bit more costly and it's going to take a little bit longer. And I think the market needs to digest that and maybe some of the hype will come out of some of the valuations in some of these companies, which is pretty extreme.

Erica Whyte:
We'll look out for that. Patrick thanks so much for all your expertise here today. That was Davos.

Patrick Farrell:
Thanks very much, Erica.

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Market Moves 30th April 2024

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