FTSE On The Front Foot As MIddle East Tensions Recede

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London stocks had a strong start to the week, rebounding from the previous week's selloff. The easing tensions in the Middle East and anticipation around upcoming economic data likely contributed to the positive sentiment. It's interesting to note the performance of different sectors, with life insurers seeing gains while precious metal miners experienced a decline, reflecting shifts in investor risk sentiment.

Retailers, particularly Ocado Group PLC, drove the blue-chip index up by 4.8% following reports that a major shareholder urged the grocer to relist in New York. 

Jefferies upgraded its rating on Marks & Spencer and Sainsbury’s to ‘buy’ from ‘hold’. For M&S, with a 310p price target, Jefferies believes the company is now a stronger business due to its expanded food offer. This is expected to drive market share and margins, leading to earnings and multiple expansion. Regarding Sainsbury’s, Jefferies believes that concerns about excessive capex burden are overstated, and the company is well-positioned to capitalise on the favourable UK grocery market. Sainsbury’s plan aims for margin expansion through volume growth and opex control, offering substantial upside to free cash flow.

easyJet PLC saw a 2.8% increase on Monday following a boost in profit forecasts and share price target by RBC analysts. The bank raised the profit before tax forecasts by approximately 10% to £653 million for 2024, and further to £714 million for next year, after the airline reported lower-than-expected first-half losses. Additionally, the analysts mentioned that lower fuel prices would also contribute to the positive outlook. As a result, easyJet's share price target was raised from 540p to 580p, representing an 8% increase from Friday's closing price. RBC expressed optimism about the future of UK travel demand, noting that despite concerns about the cost of living in 2022 and 2023, some UK macro indicators have shown improvement at the beginning of 2024. This includes a 7% year-on-year increase in disposable incomes in January and February, as highlighted by the bank

On the negative side of the ledger, Fresnillo PLC was the leading faller after gold prices retreated from recent gains amid easing tensions between Israel and Iran.

FTSE Bias: Bullish Above Bearish below 7900

  • Below 7770 opens 7700
  • Primary support 7775
  • Primary objective 8120
  • 5 Day VWAP bullish
  • 20 Day VWAP bullish

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More By This Author:

Daily Market Outlook - Monday, April 22
The FTSE Finish Line: Middle East Tensions Leads Investor Retreat Into The Weekend
Daily Market Outlook - Friday, April 19

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