Derren Nathan, head of equity research, Hargreaves Lansdown: “The FTSE 100 is up around 30 points this morning after creating further space yesterday from the lows seen in the wake of the Iran conflict. It's not all been one-way traffic, with defence stocks pulling back as investors weigh up the chances of a lasting truce in the Middle East. However, better-than-expected UK economic growth, a bid for safety inspection firm Intertek, the continued revival of sentiment towards technology stocks, and positive earnings news in industrials (Halma) and retail (Tesco) tipped the balance in favour of the bulls.
Events in the Middle East remain the key market driver, and President Trump's overnight comments on the potential for further peace talks between the US and Iran could boost equity markets today. A ceasefire between Israel and Iranian proxy Hezbollah after Israeli/Lebanese talks in Washington provides further hope for de-escalation.
For the oil market, the continued closure of the Strait of Hormuz remains the focus, and Brent Crude prices this morning have fallen only slightly to $98, reflecting the scale of the task required to find a lasting resolution. All eyes now turn to Paris, where Keir Starmer and Emmanuel Macron are hosting a summit of global leaders to facilitate the ‘immediate reopening of the strait.’
US stock futures are up again after both the NASDAQ and S&P 500 reached fresh highs. As hopes build for an end to war and the resumption of energy flows, investors are once again putting their faith in technology and its exposure to structural rather than cyclical growth drivers.
The US domestic economy is also showing signs of resilience, with this week’s initial jobless claims falling to 207,000 and undershooting forecasts of 215,000. The economic resilience and inflationary impact of higher energy prices mean that imminent interest rate cuts by the Federal Reserve are no longer on the table. Looking to the end of the year, no change is still the most likely outcome being priced in by markets. Nonetheless the last week has seen the probability of a quarter point cut by Christmas shift from 21% to 26%. Any further gain in confidence towards the resumption of the easing cycle would provide a further tailwind for equities. However, with geopolitical uncertainty running high investors would be wise to remain diversified across sectors and asset classes.
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “Netflix delivered a solid first quarter on both sales and margins, but with shares down almost 10% in pre-market trading, the reaction shows investor expectations had quietly crept higher. Many were likely hoping for a lift to full-year guidance after the surprise March price increases, especially with the stock already priced for mid-teens annual sales growth. The 11-13% organic growth outlook for 2026 looked reasonable when the next US price rise was expected later in the year, but with hikes already in play, and no shift to guidance, a clear growth reacceleration is harder to map.
Reed Hastings stepping down as chairman in June adds a leadership headline. But we wouldn’t expect any meaningful change to strategy or day-to-day operations, given the growing influence of the co-CEOs, something we saw with the recent Warner Bros. bid, which marked a shift away from Netflix’s historically cautious approach to big deals. Overall, the business still has several structural growth drivers in place, although the timing of the next phase of faster growth now looks less predictable than markets had hoped going into these results.”
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