A Strong Start For Most Markets – But Italy Looks To Struggle Amid Political Turmoil

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  • Sterling and euro see some recovery against the dollar.
  • The NASDAQ Composite index jumped by 1.6%.
  • S&P 500 index managed a 0.6% gain.
  • Shanghai index fell 1.4%.
  • Italy looks set for early elections, delaying much-needed reforms and next year’s budget.

A Strong Start For Most Markets

Steve Clayton, Fund Manager at HL Select:

“Markets look set for a positive start to the day, following strong gains on the tech-heavy NASDAQ market in the States overnight. The NASDAQ Composite index jumped by 1.6%, outpacing the broader-based S&P 500 index which only managed a 0.6% gain. Stock markets in Asia followed through, with Tokyo rallying by 0.4%, Australia by 0.5% and Taiwan by 1.4%. Chinese stocks fared less well, with the Shanghai index falling 1.4%.

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Q2 2022 hedge fund letters, conferences and more

Italian markets are expected to buck the positive trends this morning, following news that Prime Minister Draghi has been unable to hold his ruling coalition together, plunging the country into renewed political turmoil.  The Former European Central Bank chief is expected to confirm his resignation – after it was previously rejected by the president last week.

The Dollar weakened, as the euro clawed its way back from parity to reach $1.02, after hitting 20-year lows against the Greenback earlier in the week. Sterling saw some recovery against the dollar too, with the pound trading at around $1.20.

Company News

Following years of expansion, confidence amongst leading tech firms looks to be weakening. Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) last night followed other names like Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) in reining back their hiring plans. With the cost-of-living rising around the world, these big tech employers are taking a more cautious view of the outlook for consumer demand.

Ocado (LON:OCDO) has released interim results that show a business with robust finances, following recent equity and bond issuance, a fast-growing international technology licencing arm, but a declining UK retail division. Ocado Retail, which switched partners from Waitrose to M&S a little while ago, said that sales in the last six months dropped by 8% as lockdown benefits faded and consumers tightened their belts. That led to a 70% drop in cash earnings at the division and pushed the group to an overall loss for the period of £211m, compared to a £28m loss the year before.

Contrasting news from the hospitality sector emerged this morning, with upmarket operator Fullers Smith & Turner, which mainly operates in and around London and the South, reporting steady growth in sales, up 3% versus their pre-pandemic level in the last 16 weeks. Speaking at the group’s AGM, CEO Simon Emeny highlighted the ongoing cost pressures facing the industry, but stressed the group had the ability to mitigate some of these through their own actions.

Mitchells & Butlers (LON:MAB), one of the UK’s largest pub operators with brands ranging from Toby Carvery to Miller & Carter steakhouses, talked of longer lasting inflationary impacts on their business posing a major challenge to the business. Their most recent trading saw sales just 0.9% ahead, driven entirely by food sales.”

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