Rising oil prices and record EU inflation weigh on markets


After yesterday’s tepid start to the week, European markets are set to end a positive month on a weak note after another EU CPI record high saw prices rise more than expected in May to 8.1% . This, combined with further bullish pressure on oil prices, was dead weight in European markets today, with the FTSE100 outperforming.

Warmongering comments from Fed Governor Christopher Waller yesterday also weighed on sentiment, pushing US yields higher, putting him at odds with Atlanta Fed Chairman Raphael Bostic, who suggested that It might be worth considering a pause in rate hikes in September.

Waller’s comments that he wanted to see 50 basis point rate hikes for several meetings, raise the prospect that if similar views are held, the Fed Funds rate could well be well above the consensus 2.5 % by the end of the year if the Fed wishes.

As European markets retreated, FTSE100 was helped by the rise in the price of oil above 120 dollars per barrel, which acts as a tailwind for BP and Shell.

Unilever shares also rebounded strongly after the announcement of the appointment of Nelson Peltz as a non-executive director and member of the remuneration committee. Peltz recently acquired a 1.5% stake in Unilever through his Trian fund, saying he wanted to work with management to help turn the company around.

Peltz has pedigree here, given his role in the 2018 turnaround of Procter and Gamble with hopes that he can sprinkle some of that magic on Unilever, where the stock price has significantly underperformed in the past. course of the last 2 years.

LV Group shares are also higher after announcing that it has signed a partnership agreement with Ericsson to provide commercial 5G private networks for the UK market. The deal opens up the possibility for the two to access a market that is expected to be worth billions of pounds by the end of the decade.

The bottom of the FTSE100 is B&M European Retail after reporting their full year results, falling to their lowest levels since June 2020, with full year revenue falling 2.7% to £4.67bn from £4.8bn, although that over two years, revenues are much higher, increasing by 22.5% . Pre-tax profits were unchanged at £525m, while the dividend was lower at 16.5p, but that was on top of the special dividend paid in January of £250m.

On current trading, the picture looks troubling with comparable sales for the first 8 weeks of 2023 showing a 13.2% decline in sales. Management went on to warn that business models would likely remain unpredictable, which could cause consumers to favor spending away from higher-margin products, which would likely lead to margin dilution more broadly. The EBITDA margin is expected to fall by 70 to 130 basis points, although it would still be above pre-pandemic levels.

On a more positive note, B&M has announced who will succeed outgoing CEO Simon Arora. Arora will be replaced by Alex Russo who is the current chief financial officer and has held senior roles at Asda and Tesco.

Today’s inflation data, along with the current rise in oil prices, is once again weighing on consumer discretionary shares, with travel and leisure under pressure, with easyJet, IAG and Wizz Air down sharply. The TUI is also lower as the company cancels a slew of flights from Manchester Airport during June.

The latest mortgage data also indicated a slowdown in April, which is perhaps not too surprising given the rising cost of living, as well as rising borrowing costs. This seems to act as a drag on home builders today with people like Persimmon, Barratt Developments and Taylor Wimpey underperforming.

In the M&A news GSK announced it was set to pay $2.1 billion to acquire Affinivax, a Boston, Mass.-based vaccine company, with an additional $1.2 billion to be paid in accordance with development milestones.


If US markets had been open yesterday they would likely have ended higher, but Fed Governor Christopher Waller’s comments on rate hikes, as well as higher than expected inflation figures in Europe, saw markets US yields open lower today as US yields push higher.

Today’s losses are led by the Nasdaq 100, which is expected to close lower for the second month in a row, although far from the lows. The S&P500 is also lower on the day, although after the rebound seen last week, it has a chance to reverse its monthly losses.

AMC Entertainment posted decent gains for the second day in a row, after holiday weekend revenue for Top Gun: Maverick was well above expectations.

We’re also seeing decent gains in the likes of Coinbase, MicroStrategy and Riot Blockchain as US markets catch up on bitcoin’s rebound, above $30,000 and the rest of the crypto space since last Friday.

On the earnings front, we have the latest Q2 numbers from HP. A surge in PC sales over the past two years pushed HP’s share to a record high in April after it was revealed that Warren Buffett had taken a $4.2 billion stake in the company . HP is looking to acquire new businesses after agreeing to buy audio and video accessories maker Poly for $1.7 billion. In its first-quarter business update, HP reported net sales of $17 billion, with most coming from personal systems sales, which include laptops and PCs, amounting to $12.2 billion. dollars. Printing sales were slightly disappointing, down 23%.

HP also said it was pulling out of Russia, although it offered a bullish outlook by upgrading its full-year guidance to C$4.28. For today’s second quarter numbers, earnings are expected to be between C$1.02 and C$1.08 per share. This continues to be the market consensus, which currently sits at C$1.05, but continued supply chain disruptions and rising costs present a clear threat to the company meeting these expectations.


The US dollar has rebounded from yesterday’s 5-week lows, helped by comments from Fed Governor Christopher Waller that he wants to follow the path of several 50 basis point rate hikes. We seem to be seeing clear divergences in the direction monetary policy is likely to take, starting to open up among Fed policymakers.

The euro also fell despite the latest set of inflation figures showing another record high in May of 8.1%, putting the ECB in the unenviable position of coming under increasing pressure to rise at a much faster rate. than she would like. You can almost hear the groans and gnashing of teeth among German savers as the real value of their savings drops to -9% on an annualized basis. The inflation figure is likely to boost calls for a 50 basis point move in July, presenting ECB President Christine Lagarde with a messaging challenge at next week’s ECB meeting.

The pound is also weaker, although that has more to do with a weaker US dollar than anything else, although recent lending data showed mortgage lending slowing amid rising rates. Credit card spending also rose, suggesting consumers were taking on more debt to cover the rising cost of living.


Brent Crude Oil Price continued to rise after EU leaders agreed to a 90% ban on Russian oil by the end of the year, topping $124 a barrel and the highest levels since March 9 . The ban would start with maritime supplies of crude and petroleum products, but the headlines and technical details of what has been agreed have yet to be fleshed out. Hungary has been granted an exception with respect to its supplies transiting through the Southern Druzhba pipeline which transits through Ukraine.

The stronger US dollar and higher yields are helping to push gold prices down slightly on the day.


It was kind of a quiet start to the week with various markets impacted either by the holidays – notably Memorial Day in the US – or the prospect of a shortened trading week. However, looking further afield, an exaggerated price action was seen from Australian firm A2 Milk, following a cross-read by a peer that it had signed a deal to begin exports of infant formula to the United States. There is currently a shortage of infant formula in the United States and the FDA must seek solutions. A2 stock price rose 10%, driving the daily theft to 225% versus a month-on-month print of 84%.

While volatility was muted overall in the tradable universe, one instrument that showed slightly higher levels of movement was CMC’s proprietary Hong Kong Large Cap RRG Momentum Index. This highlights stocks showing positive relative strength against the overall index and has trended higher over the past few weeks as optimism builds about China reopening after lockdowns. COVID. Daly vol here printed 39.81%, although this is admittedly a shade below the monthly print of 42.38%.

The German Tech 30 was the only index to print higher daily volume than the monthly print, with sentiment undeterred by this runaway inflation print. The daily theft here reached 34.81%, against 34.11% over the month.

Finally, fiat currencies looked somewhat subdued, as did cryptos with the exception of Stellar Lumens, posting a daily theft of 127% vs. 119% on the month and overnight gains may well see this sustained short run. term.