Barclays’ shares slump, FTSE strengthens, AstraZeneca reveals Covid vaccine sales and Darktrace pops on IPO


“It may be boom time for the UK economy according to Barclays chief executive Jes Staley but not for the company itself judging by the reaction to its latest trading update,” says Russ Mould, Investment Director at AJ Bell.

“The decision not to adjust its previous bad debt estimates, unlike most of its peer group, appears to have spooked the market along with a patchy investment banking performance and a cautious view on costs as Barclays looks at reducing its physical footprint.

“Less of us seem to be splurging with our credit cards in lockdown judging by the performance of Barclaycard, perhaps because of belt tightening on one side and on the other because some people have built up a cash buffer and therefore don’t need to use credit at a time when there’s less to spend on.

“Nonetheless it is still surprising to see such a seemingly positive set of numbers overall receive raspberries rather than rewards from the market.

“The market response also reinforces the idea that it is better to travel than arrive with Barclays shares having performed strongly since the start of the year ahead of the results.

“While the lack of a dividend was not a surprise it is still likely to nag away at investors for whom a big driver for investing in banks is income – with Barclays not yet providing clarity on when normal service on payouts will be resumed.”

Markets, Tech Stocks, Astrazeneca and Darktrace

“It’s been quite the week for tech firms with very strong numbers from Amazon, Apple, Alphabet and Microsoft, helping to drive optimism in the stock market alongside robust US economic growth figures.

“A key message from many of these tech firms is that the world is moving again, with businesses investing in areas like technology and advertising, and consumers spending.

“This is fuelling the economic rebound and the likelihood is that momentum could be sustained at high rates across the second quarter.

“This is fine for now but come summer and the market will be looking into 2022 and beyond and thinking more seriously about interest rate hikes following the economic recovery. That threatens to test investors’ optimism.

“For now, global stock markets are generally in a good mood. The S&P 500 closed at another record in the US last night.

“The Paris CAC 40 has enjoyed one of its best runs in years with the index up approximately 13% year to date, making it one of the best performing major stock market indices so far in 2021.

“Even the FTSE 100 which has disappointed investors for so many years has finally sprung to life, up 6.2% in the first four months of 2021 – historically that’s close to the type of return stocks make in a year.

“For the last trading day in April, markets are divided with a small pullback in parts of Asia and Germany, while the UK and Spain move ahead.

“The FTSE 100 nudged up 0.3% to 6,982 with AstraZeneca among the top movers following better than expected results. The company has long said it doesn’t expect to profit from its Covid-19 vaccine in the early stages, but it was interesting to see it generate $275 million in sales from this product in the first quarter.

“Darktrace made its stock market debut in London with its shares up 42% in early trading. The listing valuation was nearly half that of original estimates as investors were clearly nervous about the company’s links to shareholder Mike Lynch who is fighting allegations of fraud.

“That is likely to have seen prospective institutional investors demand a heavy discount to warrant owning the shares and get the IPO off the ground.

“The surge in the share price post listing would suggest there are other investors who are more comfortable with the risks and are just focusing on Darktrace’s potential to grow fast in the cyber security space.”

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.

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