Indices, Oil and Upcoming Data 

European markets were flat in early trading Thursday ahead of a US GDP report and a deluge of earnings reports on both sides of the Atlantic. First Republic Bank slid a further 30%, extending losses from its 50% decline on Tuesday, helping to fuel a decline on Wall Street, though big tech did its best to lift the mood after Microsoft and Alphabet beat. The Nasdaq rallied half a percent, whilst the S&P 500 declined by 0.4%. European indices barely budged early Thursday morning, the FTSE 100 giving up a tenth of a percent to 7,828 amid a slew of trading updates, whilst the CAC rose a third of a percent. Oil was firmer this morning after a sharp decline yesterday saw Brent futures close the OPEC+ cut gap…big US crude draw helping sentiment a bit – EIA reporting stocks declined 5.1m barrels last week. Prompt spreads went into contango for first time since January.  

US GDP data later in the session will be the one to watch – expected to show annualised growth of 2% in Q1, slowing from 2.6% in the fourth quarter. US weekly jobless claims data also important – last week showed continuing unemployment claims rose 61k to 1.865m, their highest level since November 2021 – pointing to rate hikes taking effect. 

FRC: Still No Deal Forthcoming  

if you were JPM you might quite like its HNW client base, and they may just be waiting to get it cheaper...it would be a major creditor at point of failure and could get first dibs on the client base. Given its hands are tied on doing any deals normally, it could be a way to grab the clients…maybe too quick to say it was throwing good money after bad? The question would be why the other small contributors to the $30bn bung got involved? FRC has lots going for it – just a bad run on deposits has left it exposed – JPM will want the clients and could make it work.  

META Better 

Shares in Meta soared after-hours, rising 11% to a 14-month high after it beat expectations on earnings and flagged progress on AI. Meta delivered its first sales growth in four quarters, with revenues rising 3% to $28.6bn and guided above market expectations for the current quarter. Nevertheless, net income slid 24% year-over-year, from $7.47bn to $5.71bn on continued pressure in ad spending and its Metaverse bet. On the latter, Reality Labs revenues declined 50% and operating losses stretched out to almost $4bn. On the former, ad prices fell 17% despite impressions rising 26%. Still not great but enough for now with such a low bar – US earnings in a nutshell. No wonder Zuck is pushing AI and not the Metaverse on the call. 

Unilever Hiking 

Unilever followed the likes of Pepsi and P&G with aggressive price hikes in the first quarter, even as rises slow – underlying sales growth of 10.5% belied a –0.2% decline in volumes as prices were hiked by more than 10%. But underlying price growth moderated to 10.7% from 13.3% in the fourth quarter of 2022, suggesting the peak may be in for the FMCG sector – Jope says past peak inflation but not past peak prices (well duh, I mean inflation is still inflation even if it’s disinflation). Interesting comments he makes on poor crop yields this year increasing pricing for food oils, as well as demand in China. The very modest decline in volumes was better than expected and continues to show consumers are wearing higher prices and not really trading down from the branded goods. It seems all the FMCG stocks are passing through prices with flat volumes. ULVR added 1.64% in early trade.  

Earnings Elsewhere 

Barclays – profits up 27% on rising net interest income to £1.8bn from £1.4bn, well ahead of forecast for a flat read. Revenues also beat, rising 11% to £7.2bn. UK business is good, offsetting lacklustre performance at the investment, where profits declined 8%. Barclays UK income increased 19%, primarily driven by net interest income growth from higher rates with NIMs up to a healthy 3.18% from 2.62 a year ago. Spending by US consumers helped lift its international cards and payments business 47%. Return on tangible equity hit 15%. Shares around 3%.  

Sainsbury’s - Underlying profit before tax of £690 million, down 5% and at the top end of £630 million to £690 million guidance range. Management guiding for 2023 profit between £640 million and £700 million. Q4 ex-fuel retail sales up 7.1% (7.8% like-for-like) suggests volumes down a bit more than they’d like. Shares down 1%.  

AstraZeneca - $1.5bn drop in Covid medicines pushed overall revenues down 4% to $10.9bn, but above expectations of $10.6bn. Sales ex-Covid rose 15% with core earnings per share well above estimates. Shares ticked a little bit higher.  

WPP – Q1 revenues up 4.9% on a like-for-like basis to £3.46bn. Shares fell 2.5% in early trading.  

Deutsche Bank – best profits in ten years, up 12% to €1.9bn, emerges from the March turmoil relatively unscathed. Same story as much of the banking sector – higher interest rates boosting NIMs and offsetting less impressive investment banking revenues. Retail +10%, corporate +35%, investment bank –19%. Share rose 1.3%.  

Samsung reported its smallest quarterly profit in 14 years after semiconductor chip prices plummeted, sending the chips business to a $3.4bn loss, but forecasted recovery in second half of this year.