It’s not enough to be making money now, investors need to know companies have a clear plan to make money tomorrow. It’s been fascinating to watch share movements over the past couple of weeks as earnings season’s delivered day after day of stellar results. But this quarter is skewed, pandemic winners have probably reached peak boom and pandemic losers have yet to show turnaround growth.
For Q2 more than ever it’s the outlook that’s been scrutinised, how well have bosses transmitted their future plans and how confident are shareholders.
Today’s been no exception. In the UK ITV and British American Tobacco have been among the FTSE 100’s biggest losers despite strong revenue growth and Reckitt Benckiser is still suffering from its double whammy warning of slowing demand and rising prices yesterday. And it’s not just UK companies feeling the burn. Apple’s still not feeling the love as investors ponder just how damaging the global chip shortage could be through the remainder of the year.
“But investors are fickle beasts as Microsoft, Pfizer and Rio Tinto can attest. All saw stocks sink in the immediate aftermath of results but later surged. Have investors dug a little deeper, had a change of heart or have bargain hunters jumped on at the bottom of the day’s curve?,” Danni Hewson, AJ Bell financial analyst, comments on today markets.
“What’s certain is all of these results will pale into insignificance if the US Fed change their tune or even up the tempo. Every note will be played on repeat, keen ears straining for messages hidden or blatantly spelled out.
“One change in policy can have a huge impact. That’s evident if you take a look at the top twenty risers on the FTSE 350. Six will be big beneficiaries of today’s change to travel rules which allows fully vaccinated travellers from the EU or US to enter England without needing to isolate. Wizz Air and travel sandwich purveyor SSP secure the biggest gains as the industry looks forward to welcoming foreign tourists back. There are still caveats but this could be a game changer for attractions that get their main trade from inward tourism. It’s a tentative step but a big one and one the industry has been clamouring for.”