Burberry cutting 500 jobs
London-listed shares soared yesterday, with the FTSE 100 closing the day 1.8% up. Similar to the US, it was vaccine optimism driving prices higher, along with a surprise 0.6% June inflation figure, above estimates for the month but still well below the 2% targeted by the Bank of England.
International Consolidated Airlines Group led the FTSE 100 with a 10.7% gain, followed by food service business Compass Group and hospitality firm Whitbread, which both finished more than 7% up. In total, more than a dozen names in the FTSE 100 delivered a 5% plus gain on Wednesday. At the bottom of the FTSE 100 was fashion house Burberry Group, which sank 5.6% after announcing it plans to cut 500 jobs after lockdowns hit sales hard.
In the FTSE 250, cruise line Carnival and Cineworld Group, plus airlines Tui and easyJet, were all among Wednesday’s top performers as investors pin their hopes on positive vaccine news driving a recovery in demand for travel and entertainment.
- FTSE 100: +1.8% Wednesday, -16.6% YTD
- FTSE 250: +1.4% Wednesday, -20.4% YTD
What to watch
Johnson & Johnson: $390bn market cap behemoth Johnson & Johnson is tied into a number of the key pandemic trends. Its pharmaceutical arm is into clinical trials of a Covid-19 vaccine, while its consumer brands may have benefited from customer stockpiling. The company reports its latest quarterly earnings on Thursday, where vaccine progress and consumer demand trends will likely be a key focus of analysts. Johnson & Johnson stock is close to flat year-to-date; currently 13 analysts rate it as a buy or overweight, and seven as a hold.
Netflix: Streaming service Netflix has been a pandemic success story, with its share price jumping more than 60% year-to-date, as consumers stuck at home turned to their televisions for entertainment. In Q1, the company added 16 million new subscribers to take its total passed 180 million, investors will be watching closely to see how much of that coronavirus-induced growth was sustained into the second quarter. Wall Street analysts are anticipating an earnings-per-share figure of $1.82, up from a predicted $1.54 for this quarter three months ago. On Wednesday, a Morgan Stanley analyst reportedly upped their 12-month price target on the stock to $575, versus its $523 Wednesday closing price.
US banks: Both Bank of America and Morgan Stanley report their Q2 earnings on Thursday morning, with investors watching closely for whether trading revenue can prove the supporting factor in Q2 it has for other banks and the scale of loan loss provisions. Wall Street analysts currently swing in favour of an overweight rating on the stock.
Other major US stocks reporting on Thursday: Abbott Laboratory, Dominos Pizza, PPG Industries.
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