Expert commentary from equity markets

Exceedingly good Christmas for Premier Foods

Adam Vettesse, analyst at eToro said:

If anyone ever thought it impossible to build a fortune on mince pies, then Premier Foods is proving them wrong. The Mr Kipling maker continues to see products sell like hot cakes with another jump in sales over the festive period.

Premier Foods has leaned into the ‘takeaway for fakeaway’ trend with promotional prices, passing on some of that input cost relief to the consumer which clearly has been well received.

The challenge now is to be able to keep delivering on these raised expectations. If they can, then there is no reason why shares can’t continue on this upward trajectory.

“The FTSE 100 has edged higher today, with online food retailer Ocado and miners Anglo American, Antofagasta and Rio Tinto among the leaders.

“UK earnings haven’t been bad – Premier Foods and Associated British Foods both reported strong results today – but investors remain unconvinced about the health of the UK economy.

“This is in stark contrast to the US, where investors are fully buying in – US shares broke all-time highs on Monday, with the Dow Jones rising above 38,000 level for the first time, and moving into bull market territory.  The US has also seen brisk M&A activity – Netflix improved after announcement of a 10-year agreement to stream WWE Raw, with TKO Group, owner of WWE, rising close to 20%.

“UK results have been a small shot in the arm, but nothing has really managed to light the touch paper for investors in the way we’ve seen across the Atlantic. We’ll have more insight on the health of the UK economy on Wednesday with the release of PMI data.”

Spoons update full of Christmas spirit

It’s fair to say that even a cost of living crisis has not dulled the British appetite for a pint at the pub, especially when the pints are going cheap. Wetherspoons’ jump in sales versus last year illustrates that small luxuries will still be afforded within people’s budgets, even when money is tighter than usual.

The pub group has always been centred on value and this is in focus more than ever, albeit with inflation weighing on input costs in recent times. This value focus will have helped the business to carefully balance costs over the last year and with pressures likely to ease up in the months ahead and with rate cuts coming in, Wetherspoons is very well placed to kick on.

The firm will also now be pleased to see dry January coming to an end as it looks to meet its forecast for end-of-year numbers being in line with expectations

China market meltdown

Andrew Lapping, Chief Investment Officer at Ranmore Fund Management, Commented,

“We see the sharp decline in the Chinese market as an opportunity. As an investor, it is important to take advantage of opportunities when they arise, this is often difficult as the crowd is usually moving in the opposite direction. For sure, there are risks in China, but then there are risks everywhere, and it depends on what is in the price. Over the past year, the S&P500 is up over 20% while the Hand Seng is down 30%. There is no way the underlying business values have diverged to this degree. This underperformance, particularly over the past month, has given us the opportunity to buy high quality, well-capitalised businesses at very low prices – an exciting opportunity.”

Four years after the pandemic, EasyJet shares could finally be ready to take off

Mark Crouch, analyst at eToro said:

Airlines have faced persistent turbulence since the pandemic and so far left a lot of investors who bought the dip in this sector largely disappointed. However, with global passenger numbers soaring back to 95% of 2019 levels, it looks like the storm may have finally passed.

EasyJet have seen passengers jump by a staggering 48% compared with the same period last year, and the firm is seeing positive booking momentum for summer 2024. Shareholders will also be cheered by the company’s plan to reintroduce its dividend in 2024, reinforcing the air of confidence coming from the business.

There was one blemish with this latest update – the firm saw a narrow Q1 loss, with the conflict in the Middle East having an impact. However, this won’t be enough to deter investors with seemingly clear skies ahead for the budget airline.