Market round-up: 24-28 May

Thomas Watts


This week

With more and more of the country returning back to normality, a trip to the cinema seemed to be high on the list of activities Brits couldn’t wait for when lockdown restrictions eased.

With the country’s largest cinema chain, Cineworld, reporting its takings for the previous month, the numbers had a certain spring in their step as animated adventure comedy “Peter Rabbit 2: The Runaway” pulled in more families than expected who were just hoppy to return to the big screen again. On the news, Cineworld shares jumped 3.1% on Monday, seeing its price gently rise throughout the week as investors focused on the strong movie release pipeline planned for the summer months. The company’s statement was echoed throughout similar industries as the pent up demand during the lockdown months started to show in the real economy. 

However, during what was a predominantly buoyant week for markets, it was high street stalwart M&S that was suffering the bad hare day, as it announced an 88% slump in profits for its 2020-21 accounts. With a collapse in clothing sales sparked by the COVID-19 pandemic, the company, already demoted to the FTSE 250, also warned investors not to expect a dividend this year. 

Despite the poor results, the company’s CEO said that the poor results masked the progress being made internally and a turnaround plan was well underway. Attempts to broaden appeal, revamp their garment offering and greater investment in technology led shares nearly 10% higher on the day as investors looked towards the future for one of the Britain’s oldest retailers. 

On the economic data front, the end of the week saw a slew of US employment data, helping to push markets towards to new peaks as stronger than expected numbers showed the world’s largest economy was really starting to gather pace. Statistics released by the US Labor Department showed the number of Americans filing new claims for unemployment benefits dropped more than expected last week as layoffs began to subside, with companies seemingly desperate for new staff to meet surging demand unleashed by a rapidly reopening economy. 

Accompanied by other data on Thursday showing business spending on equipment accelerated in the US during April, UK and European markets finished the week within a hare’s breadth of record highs, with banking and mining stocks leading the way.   


Next week

With the coming week truncated by the Spring Bank Holiday along with actual warm, sunny weather predicted, a BBQ in the garden could well be the order of the day. 

With gardens and open spaces very much in demand during the pandemic, the property market has seen somewhat of a rotation of late. Nationwide’s (House Price Index) HPI data, released on Tuesday should help us understand the shift in dynamic further. The numbers represent the UK’s earliest report on housing inflation but usually produce only a mild reaction as buying and selling prices are not always correlated. However, their data still acts as a leading indicator as to the state of the domestic housing market as rising house prices attract investors and often spurs industry activity.

For those following the commodities market, especially oil, Wednesday could prove to be an interesting day as the Organisation of Petroleum Exporting Countries (OPEC) sits for its monthly meeting to discuss the state of black gold prices. Discussing a range of issues regarding energy markets and, most importantly, agree on how much oil they will produce, it is understandable that oil markets can endure heightened bouts of volatility during the meetings. Closed to the press, officials usually talk with reporters throughout the day, with a formal statement covering policy shifts and meeting objectives released after the meetings have concluded.

The first Friday of the month wraps up the week as always with US Non-Farm Payroll data. A key piece of information when determining the US central bank’s next rate move, the employment data will be accompanied by Average Hourly Earnings allowing us to gauge future inflation expectations. With infection rates falling over the past month or so across the pond, it will be interesting to see what kind of effect this has had on hiring rates in the world’s largest economy.