English
Recovery continues for key stock markets, S&P 500 and Nasdaq 100 both now up on the year
Softer-than-expected US inflation and the ongoing trade war pause have underpinned a continued positive atmosphere for equity markets, while in London Burberry has soared and Imperial Brands has slumped following results.
S&P 500 back in the green for the year
Monday’s US-China trade war pause helped markets to stage an impressive recovery on Monday, and further gains yesterday for some markets saw the S&P 500 and Nasdaq 100 both move back into positive territory for the year.
In the near-term we can expect this ongoing trade war pause to provide a foundation for further market gains. Sentiment remains cautious at best, and the recent Bank of America fund manager survey showed that investors have yet to jump back wholeheartedly into US markets, having abandoned them in haste in March and April.
The FTSE 100, up 4% for the year so far, is hovering around 8600, having itself staged an impressive recovery from the lows. For the time being, it looks like the focus for global markets will switch to the US budget talks, with hopes that the Republican-controlled houses of Congress can pass a budget that will include tax cuts to provide further fiscal stimulus.
While Tuesday’s US inflation data did show a rise in prices between March and April, the increase was smaller than expected. Crucially, rolling measures of core inflation (which excludes volatile food and energy prices) continue to decline, which will give the Federal Reserve (Fed) some space to think about rate cuts this year.
Burberry soars after trading update
A plunge into the red and more job cuts seem an odd way to generate an 8% pop in your share price, but Burberry’s recent trading has been so grim that investors are keen to latch on to any signs of good news.
Job losses will help to reduce costs for the struggling luxury firm, while the group sounds more confident that its turnaround strategy can deliver the results sorely needed to rebuild confidence in the outlook.
Burberry has already rallied 40% from its April lows, as global risk appetite rebounds thanks to the pause in US tariffs, while the détente between the US and China will boost hopes that these two key markets can avoid a sustained recession that would hurt luxury sales badly.
Imperial Brands retreats
Imperial Brands has been one of the most solid performers over the last year for the FTSE 100, and until recently had been a safe haven from the recent volatility.
However, the departure of its CEO has knocked confidence in the short-term outlook, while today’s in-line results were evidently not sufficient to bolster the share price. But, having gained over 40% over the last year, the shares have delivered well for investors, and at nine times earnings cannot be said to be too expensive.
Connect with us
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.
The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site isn’t directed at residents of the United States, Belgium or any particular country outside the UK and isn’t intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
