London Quick Take - 30 April

• FTSE 100 extends winning streak to 12 days, flat at the open with earnings deluge 

• Oil majors, miners weaker as China manufacturing PMI hits 16-month low 

• Barclays jumps on strong investment banking performance, Smith & Nephew shares rise on strong outlook, Taylor Wimpey lower as UK house prices fall 

• Sterling lower for a second day after hitting 2-year high

• Carmakers pull guidance amid tariff uncertainty, Aston Martin presses the brakes on US imports 

UK 

The FTSE 100 chalked up a 12th straight day of gains yesterday and bulls are arguably looking a little tired as we digest a slew of corporate updates this morning. The blue chips added about 0.1% in early trade, with updates from Barclays among others. Meanwhile sterling pulled back after hitting a two-year high yesterday. 

Weighing on the index, Shell and BP slipped as oil prices fell further. WTI front month futures dipped below $60 for a two-week low. Oil is on track for largest April loss due to trade war impacts and eased OPEC+ supply curbs, with production rising next month. Brent has dropped15% to near $63/barrel, its biggest April fall since 1988. 

Although we have some generally positive sentiment around trade deals – US commerce secretary Howard Lutnick saying one has been struck already – risk appetite is fragile and some weak China data overnight is perhaps holding back the bulls and weighed on mining stocks with Glencore (production update), Antofagasta and Anglo American among the biggest fallers at the open. China's manufacturing PMI fell to a 16-month low in April as the bite from tariffs was felt. US consumer confidence yesterday was also very weak.  

Barclays hit all the right notes with its quarterly results and shares have lifted over 3% this morning. This was a strong quarter for Barclays led by booming trading and wealth management, but the UK consumer business is also chugging along very well with growth of 14%. And the 14% return on tangible equity (RoTE) marks a big improvement from a year before. Group income of £7.7bn was up 11% year-on-year, with Group net interest income (NII) up 13% to £3.0bn. 

Like its Wall Street cousins, Barclays benefited from increased trading activity in the quarter off the back of exceptional volatility in financial markets. Investment Bank income increased 16%, including a 21% increase in FICC (fixed income, currency & commodities). Banks don't normally get much credit for big trading quarters so we will see if this really is a tailwind for the stock against a slowing economy and tough macro backdrop with rate cuts coming?

On the core consumer business, net interest income looks positive, with Barclays increasing its NII guidance for the year to £12.5bn from £12.2bn previously. It also raised its UK NII figure to £7.6bn from £7.4bn after an 18% rise in the quarter. For the quarter, Barclays reported profit before tax +7% to £756mn, as total income increased 14% to £2,074mn. Barclays UK delivered a RoTE of 17.4%, which though down on last year, suggests it’s in good shape heading into more uncertain macroeconomic conditions. 

Shares of GSK rose in early trade as the company reassured investors over sector-specific tariff threats and worries about its vaccine business and the impact of the Medicare Part D redesign in the US. The company reported a 5% rise in core operating profit to £2.5 billion in the first quarter a good sales increase across the suite of specialty, respiratory, immunology, oncology and HIV products, while vaccines were –6%. The drugmaker said it continues to expect 2025 turnover growth of between 3% and 5% and core operating profit growth in the range of 6% to 8%. GSK still faces all kinds of headwinds but the update offers some reassurance. 

Smith and Nephew shares popped 6% as medical equipment maker delivered a good performance with sales +3.1% on strong operational performance vs poor China and fx headwinds. Full year 2025 guidance unchanged, with management seeing underlying revenue growth around 5.0% and trading profit margin expansion to between 19.0% and 20.0%. Smith & Nephew expects to take a hit of $15 to $20 million from tariffs in 2025, based on what it knows so far – not a huge impact overall. 

Elsewhere, Taylor Wimpey shares were down despite a relatively upbeat update and performance broadly in line with expectations, as data showed UK house prices fell.  Nationwide reported house prices fell by 0.6% in April, which brought annual house price inflation down to 3.4%, from 3.9% in March. 

Shares of Haleon, the Pfizer/GSK spinoff which makes toothpaste and painkillers, were down despite a decent Q1 organic revenue growth of 3.5% and the company reiterating its FY 2025 guidnace of 4-6% revenue growth.

Aston Martin said it will limit imports to the US due to the uncertainty. In an update this morning it said it was “currently limiting imports to the US while leveraging the stock held by our US dealers”. This is tough for Aston as the US generates about a third of revenues for the firm. Q1 numbers were in line but still not looking sharp, with gross profits down a third and operating losses widening somewhat. However pre-tax losses were 43% less than a year before.

US 

The S&P 500 has risen for six straight sessions, its longest winning streak since November. Vix down to 25 from a post Liberation Day high of 60. Tin hats time? TD Securities and Susquehanna were out yesterday urging investors to buy some downside insurance – Vix has come right down and I’ve said earlier this week it looked like markets were becoming too complacent.  

GM pulled guidance – Stellantis and Mercedes have done the same today. But the White Houe has talked about destacking auto tariffs – so companies would pay the auto tariff but not also eg the 25% Mexico tariff on top, except China - parts from there still subject to additional 145%. 

Uncertainty reigns - GM beat but has no clue what the impact from tariffs will do to its full-year guidance. Adj EPS came in at $2.78 vs $.272 estimate – meaningless statistic given revisions and NO CLARITY on the outlook. GM said it is forced to suspend guidance and pause shares buybacks due to tariff uncertainty. Stating the obvious CFO Paul Jacobson said the impact from tariffs could be “significant”...we know. The investor call is delayed until 1st May as they await updates to US trade policy.  

Pfizer also stuck to guidance but said it had not included any impact from tariffs as it doesn’t know what this might be when it all shakes out.  

Coca-Cola beat and stuck to guidance with minimal impact from tariffs – shares up 16% YTD on flight to quality/defensives.  

UPS reported Q1 adjusted EPS $1.49 vs exp $1.38. Company not updating FY guidance due to macro events. Plans to cut 20k jobs on lower volumes from Amazon (reports this week...presumably consumers not buying as much stuff as they pullback spend). But UPS said it sees $3.5bn in cost savings from 2025 reconfiguration plan. 

PayPal reported better than expected earnings but missed on revenue. Venmo revenues surged 20%...PYPL added 2mn first time debit card users during the quarter, and total debit card payment vols +60% as a result. Answers some questions about whether Venmo can be a useful revenue driver. 

Spotify was not sounding great with guidance for monthly active users about 5mn short of expectations, with operating income and gross margins also a little light on what was anticipated. Snap fell sharply as it too pulled guidance. 

The most interesting update probably came from Visa which delivered a beat as consumer spending remained resilient, launched a new $30bn buyback. 

Amazon had a tough day but just about ended flat for the session after reports it was looking to include a tariff surcharge notice on products attracted the ire of the White House. “This is hostile and political act by Amazon,” White House press secretary Karoline Leavitt said at a press briefing. A quick phone call to founder Jeff Bezos by Donald Trump ended the notion. Amazon reports after the close tomorrow. 

Today's Earnings and Data

Today we have earnings from two of the Mag 7 with Meta and Microsoft due to report after the close. Before them, Caterpillar, ADP and Etsy set the scene. Caterpillar has clear China/tariff exposure combined with US recession and global growth slowdown narrative. CAT stock is down about 15% YTD.  

On the US front, Jolts job openings showed up some hard data catching up with sentiment. Job openings fell to 7.2 million in March and the ratio of job vacancies for every worker counted as unemployed fell to 1.02, a new cycle low...but still not dropping off a cliff in the classic recessionary style. March was still slow-to-hire and slow-to-fire, with private sector hiring rate inching down to 4.5%, and the firing rate ticking down to 1.1%. But that is private sector ex-DOGE cuts. 

More important US data today comes in the shape of the PCE price index, which is expected to be flat month-on-month. We are yet to see any real follow-through from the very soft survey data into the hard stuff, but tariffs are yet to really bite.

Europe back out of USA

The USA boycott trade, or the Make Europe Great Again trade, was clear over April. “There has been a sharp stop of foreign investor inflow into US bond and equity markets over the last 2 months…The flow evidence so far points to an, at best, very rapid slowing in US capital inflows and, at worst, continued active disinvestment from US assets:” - DB. 

Foreign investors sold $22 billion of US stocks in April, according to Goldman Sachs. This follows a YUGE $41 billion sold in March, the most in at least a year. High-frequency fund flow data suggests that the biggest sellers are European investors - indeed everyone else were net buyers. That said, overseas investors still own about $16 trillion of US stocks, equivalent to 23% of total US stock market value. As flows have shifted, the euro has rallied about 10%. The key thing for the next few months is will Europeans continue moving money back home? Yesterday saw the US 10yr yield down to 4.18%, the lowest since April 8th. 

Elsewhere... 

Brazil breakout? EWZ ETF breaking free from a 16-month downtrend. BofA was out with a chart a couple of days ago highlighting how 'cheap' Brazil appeared on an historic basis (not that history means a heck of a lot these days with trade being upended by Trump). Nevertheless, the Ibovespa, the Brazilian stock market index, forward 12-month PE ratio was at a 28% discount, according to BofA, and now we have this move on the ETF.