Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “The FTSE 100 has continued yesterday’s momentum, opening marginally higher this morning despite little in the way of major stock results. This is the relative calm before the storm, as first-quarter earnings season is set to kick off next week with the likes of Barratt Redrow, Imperial Brands and Tesco first out of the gates. Overseas, tech names like ASML, TSMC and Netflix are also on the docket, with the first two likely being buoyed by strong chip demand amid the AI boom.
US stock futures slipped lower this morning, giving up some of yesterday’s gains as renewed Israeli strikes on Lebanon raised questions about the durability of a fragile ceasefire agreement in the Middle East. While it’s been a tough start to the year for equity investors, the bigger picture needs to be kept in mind. The S&P 500 has already rallied more than 7% from its 30 March low and is now down less than 1% year-to-date. While progress towards a more permanent resolution in the Middle East will dominate short-term market moves, it’s earning power that drives stock prices in the long term. Some corners of the market have seen their share prices get caught up in the broader market sell-off, despite a resilient or improving earnings picture, so there’s something to be said for being greedy when others are fearful.
Brent Crude prices recovered some of yesterday’s sharp losses this morning, moving nearly 2% to around $97 per barrel following further Israeli strikes on Lebanon. The Strait of Hormuz, which handles around 20% of global crude and gas flows, remains largely obstructed, and Iranian media reports suggest that oil tanker traffic through the Strait has been suspended again following the attacks by Israel. Oil prices will likely remain elevated and choppy until a more permanent agreement is struck between all parties, and on that front, US Vice President JD Vance is set to lead a US delegation to Islamabad for direct talks with Iran this weekend.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“Meta’s new AI model, Muse Spark, is a better-than-expected first release from Zuckerberg’s Superintelligence Labs, a team he's spent tens of billions building after last year’s misstep that led to a reset of its previous model group. Shares jumped last night as early benchmarks show the model performing in the same broad range as leading systems despite this being the team’s first real outing since that overhaul. Meta was upfront that this is very much iteration one, and while there still appears to be a gap between Muse and the top models from OpenAI and Anthropic, this moves Meta back into the upper tier of model builders. With markets having largely priced in little return from its AI investment plans, this release offers an early signal that the new team is back on track and begins to put some tangible footing under longer-term monetisation hopes - we think the risk/reward setup for Meta is attractive right now.”
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