AAfter an initially cautious start, the European markets have risen today, which was to a large extent supported by a trend reversal in the travel sector.
EasyJet started us this morning by saying that first-half losses are likely to be a little less than expected, which helped the stock see an initial spike that day.
While this can obviously be interpreted as a half-full story of the glass, losses are still projected to be between £ 690 million and £ 730 million. This is mainly due to a cost decrease where the cash burn was £ 470m in the second quarter. The airline expected a significant spike in late May if travel restrictions on overseas travel were eased and said it would increase flight capacity from the current 14% to 20% of 2019 levels.
Passenger numbers are down 89% to 4.1m, which brings revenue down 90% to £ 235m. Earlier this week, HSBC suggested that EasyJet may need to raise new equity given the challenges posed by the UK government’s new traffic light travel system. This morning’s update seems to counter that narrative as the airline has access to £ 2.9bn in liquidity after raising over £ 5.5bn since the pandemic began.
Having already sold and leased around 43 aircraft to raise funds, they have an additional 141 fully owned and unencumbered aircraft, which make up over 40% of the remaining fleet. So you certainly have enough room to increase your liquidity
Under all of that, IAG stocks are also higher after the sector was ripped off by U.S. carrier American Airlines, which said it is expected to fly more than 80% of its international capacity this summer when compared to 2019 contrast to EasyJet’s more modest estimates of 20%; However, the prospect is that for some airlines, international travel may offer a greater respite and that recovery could occur somewhere in between.
Holiday Inn and Crowne Plaza’s Intercontinental Hotels Group holdings are also higher, likely for the same reasons, with companies like Accor also seeing decent gains.
LVMH’s latest results helped the CAC40 rise after first-quarter sales exceeded expectations after reporting sales of nearly EUR 14 billion, an increase of 30%. This was also helped by the recent Tiffany acquisition, but even without it, the fashion giant saw sales grow 52% in its fashion and leather goods businesses, with China and the US leading the recovery.
Tesco this morning reported a 20% drop in earnings for its most recent full-year figures, which dragged shares significantly lower. That seems like an overreaction given the challenges the company is facing and the fact that profits were still quite good at £ 825m despite the increased costs, and the supermarket gave its discharge for business rates of 535m . GBP back. On the outlook, Tesco believes sales volumes will decline as lockdown restrictions ease. However, costs are also expected to decrease as well. This should translate into better margins and an increase in earnings that should return to last year’s levels.
US markets opened mixedly before moving higher, hitting new record highs for the Dow and S & P500 as investors pondered recent first quarter earnings results from US banking heavyweights JPMorgan and Goldman Sachs, both of which drove expectations . The general reaction has been a bit overwhelming, although this may have more to do with the fact that most of the outperformance was already in the price, based on the price gains of the past few weeks.
On the latest numbers, JPMorgan exceeded consensus expectations for earnings and sales, aided by a sharp surge in investment banking revenues, while net interest income fell 7% due to the flatter nature of the yield curve.
Today’s Q1 numbers painted a pretty similar picture and broke expectations. Revenue rose to $ 33.12 billion, well above expectations of $ 30.4 billion. Investment banking revenue was higher than expected at $ 2.85 billion, as was equity and trading revenue, which rose to $ 3.29 billion, while the steeper yield curve helped push fixed income to 5 $ .76 billion soared. The bank also released another $ 5.2 billion in loan loss provisions after doing something similar earlier this year as the U.S. economy continued to show signs of improvement. The provision for bad loans has now decreased to $ 25.5 billion.
The clouds on the horizon appear to be revolving around credit demand, which JPMorgan said is likely to continue to be challenged, while deposits rose 24% year over year to $ 2.3 billion. This seems to be what weighs on stocks in early trading as there is so much money on the balance sheet that it is struggling to borrow, with higher interest rates affecting home loan demand while small business lending compares 50% decreased a quarter ago. Consultancy fees also rose 43% to over $ 1.1 billion.
Goldman Sachs also had an impressive performance in the fourth quarter with a similarly strong first quarter performance. Profits were $ 18.60, well above expectations of $ 10, and revenue also rose to $ 17.7 billion, $ 5 billion more than expected. The bank outperformed across the board, with revenue up 68% to $ 3.69 billion and FICC revenue up 31% to $ 3.89 billion. Given the recent events surrounding Archegos Capital and the aftermath of the demolition of this hedge fund, it doesn’t seem to have been too many setbacks.
Wells Fargo also exceeded expectations for the first quarter with revenues of $ 18.06 billion and profits of $ 1.05 billion. Unlike JPMorgan and Goldman, they are much more focused on the bank as it also leads weaker credit demand despite an improving US economy. The numbers were also increased by the release of $ 1.6 billion from loan loss provisions.
With Bitcoin, Ethereum and other cryptocurrencies trading at or near record highs, all eyes are on Coinbase today as it is listed on the Nasdaq. The shares are expected to rise sharply from the $ 250 reference price, with early expectations that we will see the shares open above $ 350.
Moderna stocks are also higher after new data showed the jab was 90% effective six months after the second dose was given, while Johnson and Johnson stocks were after yesterday’s jab suspension by the U.S. FDA are a little softer.
Discovery stocks are lower after reports that Credit Suisse sold more blocks of shares from its exposure to Archegos Capital.
In contrast to airlines based in Europe, American Airlines expects a flight of more than 80% of its international capacity in the summer compared to 2019.
The US dollar continued to come under pressure today, falling to a three-week low against the euro. The euro appears to be a bit bidding on the comments made by the Governor of the Bank of France, Villeroy, this morning when he said the ECB might be able to exit the PEPP program by March 2022. Other members of the governing council seem to be thinking about it as well, in stark contrast to the Federal Reserve, where policymakers seem in no hurry to loosen their support. That ambivalence also helps support commodity currencies, which also outperform the Australian dollar at a three-week high.
Crude oil prices continued to rise after US API inventories fell more than expected as demand continued to show signs of picking up and optimism about the US economic recovery growing. Weekly inventories were down 5.89 million barrels, bringing Brent prices back above $ 66 and a three-week high.
Bitcoin prices hit another record today at $ 64,000, along with other cryptocurrencies that have seen buying interest also surge in the last few days, before Coinbase is featured in the Nasdaq index today. We’ve also seen record highs in Ethereum, Litecoin, and a number of other smaller tokens. These moves have also helped push the CMC Major Crypto Index to new record highs.