Wall Street hits record high after FTSE 100 ends first quarter in the red
Wall Street has posted its fourth consecutive quarter of gains after tech stocks pushed the S&P 500 to a record high today.
The S&P 500 closed up 0.57 per cent, just shy of hitting 4,000 points for the first time as hopes of economic recovery offset a spike in US Treasury yields and the collapse of hedge fund Archegos.
The Nasdaq capped off the quarter by closing up 1.7 per cent, while the Dow Jones turned negative in late trading and closed down a marginal 0.02 per cent.
It came after the FTSE 100 closed lower, ending a turbulent first quarter with a muted session that was dominated by Deliveroo’s dismal stock market debut.
The success of the vaccine rollout in the US and global economic recovery helped to push up 10-year treasury yields which piled pressure on stocks. A muted US session fed into Asian markets overnight.
“The bogeyman which has haunted investors since late January – rising bond yields and what they say about inflation and interest rate risks – is rearing its head once again,” Russ Mould, AJ Bell’s investment director said.
“While it may be a disappointing end to the first quarter it is worth remembering that barring something extremely dramatic today, global stocks are on course to have enjoyed reasonable gains overall in the first three months of the year,” Mould added.
UK economy resilient in the final quarter
Not even a set of upbeat GDP figurescould pull the FTSE into the green today.
Figures from the Office of National Statistics showed the UK economy fared better in the last six months of 2020. GDP rose 16.9 per cent and 1.3 per cent in the third and fourth quarters respectively with an early estimate of one per cent growth in the last quarter beating expectations.
The economy contracted 9.8 per cent last year, marginally lower than the initial estimate of 9.9 per cent.
“At one time there had been strong belief that the fourth quarter would see a renewed economic contraction. However, it is evident that lessons have been learned in keeping activity going amid COVID-19 restrictions,” Howard Archer, chief economic advisor to the EY Item Club.
Nationwide figures also showed that house price growth slowed in March with prices rising 5.7 per cent compared to the same period last year.
Deliveroo sinks on debut
Deliveroo had a lacklustre start to public trading this morning as shares crashed as much as 30 per cent within 20 minutes of trading.
The delivery firm’s shares closed down 26 per cent at below 300 pence per share from the offer price of 390 pence per share, wiping more than £2bn off its valuation.
The offer price was at the bottom end of Deliveroo’s pricing range after a string of fund managers said they would not take part in the deal because of concerns over the firm’s economics.
Noisy investors who challenged Deliveroo’s valuation based on its economic – the firm is yet to make a profit – look to be vindicated this morning.
“The pandemic has offered a structural growth opportunity, but it’s worth asking if lockdowns mean things are as good as they will ever be for a takeaway service. The longer-term outlook depends on how demand holds up in a post-pandemic world, and if that road to profitability looks any clearer,” Sophie Lund-Yates, Equity analyst at Hargreaves Lansdown said.