There is an air of renewed nervousness pervading financial markets after the euphoria which was initially prompted by the US-Iran ceasefire.
This agreement already seems to be fraying at the edges – with continued strikes by Israel on Lebanon a key sticking point. With talks on a lasting deal yet to begin it’s understandable that investors are taking a circumspect view.
The FTSE 100 outperformed its Asian and European counterparts as energy stocks and defensive names clawed back some of their post-ceasefire losses. Housebuilders were lower as interest rate expectations continue to wax and wane with the prevailing market mood.
Notably, oil prices crept higher again, with Brent crude back above $97 per barrel. There is still optimism that the fragile peace will hold but also a growing awareness that things won’t go back to a pre-war state in a hurry.
The disruption and damage to infrastructure seen over recent weeks is likely to take months to unpick and the inflationary pressures unleashed by the conflict are only just beginning to feed into the wider economy. Even if energy prices eased significantly tomorrow, there is still likely to be a lasting impact.
Investors will be monitoring the core PCE measure of inflation and the final estimate of fourth quarter US GDP to gauge what shape the US economy is in to weather any ongoing turbulence.
ME Group / Asda
ME Group is hoping to clean up with a new Asda contract. Having made its name with photo booths, the group has more recently pushed hard on laundry machines in places such as petrol forecourts and car parks.
The deal with Asda will see laundry machines plumbed into the grocer’s sites across the UK.
It means someone could park their car, plop their clothes into a machine for a spin, do the weekly shop, and then go home having completed two life chores in one go.
It’s a no brainer for Asda as the machines won’t take up much space, and they provide another reason for people to visit its stores.
Asda has been left behind in the grocery war thanks to Tesco and Sainsbury’s eating its lunch, so it needs to do everything it can to make its stores more relevant.
Uniqlo / Fast Retailing
Uniqlo’s owner is reaping the rewards of aggressively rolling out new Uniqlo stores as profit has soared.
Japanese group Fast Retailing has put a lot of money behind Uniqlo’s expansion and shoppers are loving it.
Uniqlo is by no means the cheapest retailer, but it has developed a reputation for selling good quality, affordable clothes and offering a pleasant shopping experience.
Many people are happy to pay a little bit more if they feel they’re getting something that will last them a while, and Uniqlo is smiling all the way to the bank.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
