Market Report: US market awaits bank earnings, Guinness maker drops Ireland

LAGOS (Capital Markets  in Africa): Guinness maker Diageo has announced plans to drop its listing in Ireland – it will also be giving up a listing in Paris. That means the drinks giant will instead be focussed on its London listing and secondary listing in New York. While the optics of the Guinness brand saying goodbye to Ireland may appear out of step, the reality is that maintaining multiple listings in different jurisdictions is complex and expensive. Stepping away is the right move operationally. At the same time, we’ve seen Diageo double down on its commitment to London in recent times, including the building of a £73m brewery and tourist centre in Covent Garden which is opening in autumn. Diageo’s unrivalled stable of brands makes it well-primed to capitalise off loyal fans through alternative revenue sources, like physical experiences. This should be a longer-term source of income for the group and sets it apart from smaller players.

A surprise fall in US producer prices has reignited hopes that the interest rate hiking cycle may be approaching an end, which also triggered the dollar index to fall to its lowest level in a year. There were gains on Wall St, with the S&P 500 up 1.3% and the Nasdaq approaching a 2% increase. However, futures have eased as investors take a breath before a slate of bank earnings later today. With the recent banking turmoil still front of minds, these accounts will be given very close attention. The mood music is slightly positive which led to gains in Asian equity markets and is expected to feed into momentum on the European and UK indices today.

Electrical specialist AO World has come out swinging. In a brief statement, it’s highlighted that trading has been better than expected and upgraded profit expectations. This is a serious achievement given how tough the landscape is for bigger-ticket items at the moment, and speaks volumes on the group’s efforts to improve its proposition and cost profile. Ultimately there is still some way to go before margins are truly comfortable, but that’s a tough ask in today’s world when price is largely the only differentiator on where people choose to buy electrical items and white goods.

Brent Crude is trading at over $86 a barrel, its highest level in over two months. This comes as China has upped its imports, while the market still reels from the unexpected OPEC+ cut earlier this month. The big question is what these higher prices will mean for consumers and inflation. The elevated levels raise conCacerns about how this will shake out for energy bills, food prices and monetary policy.”

By Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown: