Week in review: Wall Street earns a little respect

Impressed by good news on company profits, investors just can’t get enough of US stocks. Social media giants Twitter and Facebook were among the week’s most coveted companies. Shares in Twitter rose by more than 15% on Tuesday after it reported revenues of $787 million, beating predictions of $776 million. A healthy number of monthly active users – 330 million – provided extra encouragement. And despite having to set aside $3 billion to pay regulatory fines, Facebook’s figures were well received.

Computer love

Meanwhile, software-maker Microsoft’s valuation broke the $1 trillion barrier for the first time as investors cheered a 14% increase in sales in the fourth quarter. The technology-heavy NASDAQ closed at a record high of 8,120.82 on Tuesday.

Its broader counterpart, the S&P 500 Index, also surpassed its previous best. Positive earnings reports from the likes of Coca-Cola and toymaker Hasbro went down a storm. Machinery-maker Caterpillar and chip-producer Intel were snubbed after failing to beat predictions, however. The S&P 500 has recouped all of last year’s losses, but trading volumes are relatively low and the earnings outlook is lacklustre. It was up 0.7% over the week to close on Thursday.

Say hello, waive goodbye…

…to sanctions waivers on buying oil from Iran. The agreements allowed several countries (including China, India and Japan) to buy oil from the Gulf state, despite a wider US embargo on Iran’s exports. Donald Trump’s administration said that it will not renew the agreements when they expire in early May. Brent crude ended the week at $75.15 per barrel, a level not seen since October. Saudi Arabia and the United Arab Emirates, which are seen as “supply substitutes”, are both benefiting from the higher prices and increased market share.

Although the UK’s FTSE 100 has a lot of energy-related constituents, the oil price gains were insufficient to push the index up over the week. It finished down 0.4%. For the broader UK equity market, the worst-performing sector was basic materials. On the upside, healthcare stocks did well.

Hunting high and low

The hunt got under way to find the next governor of the Bank of England (BoE). Incumbent Mark Carney will step down in early 2020. Anyone asking the BoE to “take on me”, must be able to maintain global confidence in UK financial markets, according to the job description on HM Treasury’s website. Several potential candidates are being mooted by the financial press as potential replacements for Mr Carney.

Don’t you want me, Sainsbury’s?

…asked Asda. The companies, two of the biggest supermarket chains in the UK, had been set to merge. But the country’s competition regulator has stepped in to block the deal over fears that it could increase consumer prices and reduce competition in the sector significantly. On the other hand, investors felt that the outlook for holiday provider Thomas Cook was bright. Its shares climbed nearly 20% on Tuesday as potential bidders clamoured to get their towels on its sun loungers.

Elsewhere, a tie-up between German banking giants Deutsche and Commerzbank was taken off the table. The firms agreed that the benefits of a deal would not be big enough to compensate for the costs associated with it. German business confidence dropped unexpectedly in April, with negative associations for a recovery in economic growth. The FTSE World Europe (ex UK) Index closed on Thursday practically unchanged on the week, at 442.23.

And finally…

Something fishy’s up in the north of England. Recently, residents of Doncaster have been left floundering to rationalise some strange occurrences at Martinwells Lake. Ducks were said to be disappearing, and anglers' catches were diminishing. One man has come up with a somewhat exotic explanation for the phenomena, however: piranhas in the lake.

Officials had dismissed an earlier rumour of the carnivorous fish as urban myth or internet clickbait, set to reel in the gullible. After all, the South American predator would be somewhat out of plaice in South Yorkshire. But fishing enthusiast Davy White has gathered evidence that the story could be more than a red herring. Mr White was walking beside the lake with his partner and young son when he spotted a suspiciously toothy fish carcass floating close to the shore. On retrieving it from the water he realised its alarming resemblance to a piranha and submitted it to the UK’s Environment Agency for further investigation. It’s thought the fish may have previously been a pet, released into the lake when it grew too large. Scary stuff – we’ll leave the authorities to mullet over.

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Risk warning

Risk Warning

The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested.