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The Trader: Stocks up as earnings optimism wins, inflation expectations higher, Trump launches social media

European stock markets rise in early trade, as Donald Trump launches his own social media platform
The Trader: Stocks up as earnings optimism wins, inflation expectations higher, Trump launches social media
  • FTSE 100 not far off best level in 18 months
  • S&P 500 closes at record high after seven straight days of gains
  • Trump's 'TRUTH Social' launches in the US

Markets latest... European stock markets rose in early trade Friday, set to finish the week largely flat after a little wobble but not a huge amount of movement. Churn seems to the be order of the day after a decent run up for the FTSE 100, which hit its best level in about 18 months last Friday. It’s not far off that level this morning. Bit of a double whammy for UK this morning with the Bank of England chief economist warning inflation will exceed 5 per cent and retail sales falling again. Stagflation vibes but sterling holding on ok and 2-year gilts back off their recent highs, though the wires just flashed the UK 10-year breakeven inflation rate has risen to its highest in 25 years. A GfK report showed consumer inflation expectations jumping to a record high. That’s what the Bank of England is expressly trying to avoid. Asian shares were up as Evergrande (3333) repaid a missed dollar interest payment. IHG shares off 2 per cent despite a rebound in bookings thanks to Brits doing more holidaying in the UK, Sainsbury’s also lower as it abandons plans to sell its bank.

Record highs... The S&P 500 closed at a record high and made it seven straight days of gains amid a mood of positivity around earnings. It ends a two-month pullback that saw it decline a modest 6 per cent before recovering. Rates are higher – US 10s at their highest since May at 1.7 per cent and 2s at a year high, curve flatter. The 10-year TIPS breakeven inflation rose above 2.61 per cent to hits its highest since 2012. But investors are shrugging off inflation and expected central bank policy moves because of earnings growth being more positive than thought. Tesla (TSLA) shares rose to a record after earnings beat expectations. Energy and financials lagged, megacap tech did the lifting +1 per cent (FANG+TM up 1 per cent). Again slower growth, higher inflation supports growth stocks as real growth is at a premium. A steep drop for IBM prevented the Dow Jones from rallying.

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