The Trader: Wall St notches fresh record as US growth surges, Astra beats, Barclays falls

Wall Street closed at another record high, copper surged to a new ten-year peak above $10,000 a tonne and oil firmed up above $64 for WTI as the strong cyclical play based on the reopening story held up. The S&P 500 rallied 0.7 per cent to close above 4,211, a new all-time closing high. European stocks are a firmer this morning after a bit of a false start on Thursday that saw early gains erased as the session wore on.  

US data continues to look very impressive. GDP rose 6.4 per cent, which was a little lighter than expected but still very strong. But this is just the start – we are waiting for the big fiscal relief and infrastructure spending to feed into the data over the next three quarters as the reopening really takes off. New York will be fully open without any restrictions from 1 July. Consumer spending is up big, rising more than 10%. Inflation is feeding through: The PCE price index increased 3.5 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the core PCE price index increased 2.3 percent. Initial jobless claims decreased by 13,000 to 553,000 in the week ended April 24th, the new post-pandemic low. 

Good numbers from AstraZeneca this morning as revenues rose 15 per cent to $7.3bn despite the impact of Covid delaying diagnosis and treatments of other conditions. The vaccine delivered $275m in revenues but is loss-making for now. Shares ticked higher in early trade, rising 2.5 per cent to the top of the footsie. Barclays dragged on the FTSE 100, sliding 6 per cent to the bottom of the index as a drop in investment banking earnings, lower revenues and a cautious outlook took the shine off a doubling in profits. Net income rose to £1.7bn from £605m a year ago but revenues fell 6 per cent to £5.9bn on lower interest rates and lower demand for credit in Britain. Income from its corporate and investment bank declined 1 per cent to £3.6bn as fixed income trading declined 35 per cent. Consumer, cards and payments income fell 22 per cent to £800m. UK income was down 8 per cent to £1.6bn. Looking ahead, Barclays seemed very cautious, particularly about its UK unit, saying it remains uncertain and subject to change depending on the evolution and persistence of the COVID-19 pandemic. And whilst it reported a massive drop in credit impairment charges, it did not reverse any already allocated, which is in contrast to most peers. Surging ecommerce (see Amazon below), helped Smurfit Kappa return a 6 per cent rise in Q1 revenues.  

Amazon shares rose over 2 per cent in after-hours trade as the company continued the run of blowout tech earnings. Earnings per share hit $15.79 vs. $9.54 expected on revenues of $108.5bn, a rise of 44% from a year before. Income trebled to $8.1bn, with $4.2bn coming from the cloud business. This was another stunning quarter that confirms not only that the likes of Amazon were short-term winners from the pandemic but remains long-term structural champions as consumer trends change and – often forgotten – more and more businesses migrate to the cloud. 

On the other hand, Twitter shares tumbled 11 per cent in the after-hours market as the company delivered a cautious outlook and it missed on user growth expectation. The company reported revenue of $1.04bn for the quarter, up 28 per cent from $808m a year before. Ad revenues rose 32 per cent year-on year to $899m. Total monetizable users grew 7m to 199m, a little short of the 200m expected. If ever there were a company with immense potential that it repeatedly fails to realise, it’s Twitter. 

Another Bank Holiday float, but a very different story this time: Shares in Darktrace soared on their debut this morning. Learning a lesson from the Deliveroo flop perhaps, the company priced the IPO at a more conservative 250p, implying a market cap of £1.7bn, but was up around 38 per cent in early trade around 350p, taking the market cap to £2.4bn. Shares are open for conditional trading with unconditional trading to commence under the ticker DARK on 6 May. The right price is very important for an IPO – let people who are getting in after the primary offer a chance to earn something for their trouble, rather than pricing it too aggressively and taking any upside off the table. Darktrace seems to have learned this lesson, with the £1.7bn market cap at the offer well below the £3bn they had previously hoped for. The area of cyber security in which it operates is also one that is seen growing materially over the next few years. For London it’s a welcome thumbs up after the Deliveroo debacle and an encouraging float for future tech listings.

Neil Wilson is chief markets analyst at Markets.com