Weekly Market Update- Week Ending 29/07/2022

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It was a positive week for global equity markets. Despite the Federal Reserve increasing interest rates by 0.75%, investors took comfort from the Fed chairman’s comments that they will be guided by the data going forward and the size of future rises might not be as significant from here.

Earnings season reached a gallop this week with many of the global mega-caps reporting. Despite earnings at Microsoft and Alphabet missing analysts’ estimates, management guidance was better than many had hoped and the shares reacted positively.

Closer to home, benefitting from the increase in interest rates and people looking to either refinance or get a new mortgage, Lloyds profit beat forecasts when it announced results on Wednesday. The UK bank raised its full-year guidance and declared an interim dividend of 0.8p per share, a 20% increase on last year.

Shell reported its best ever quarterly profit on Thursday of $11.5bn, beating their previous record of $9.1bn achieved in the previous quarter. The oil major has benefitted from a higher oil price which rocketed during the quarter following the invasion of Ukraine by Russia. Despite the record profit, Shell held the dividend unchanged at $0.25 a share, perhaps the company is looking to stay under the radar as calls for higher windfall taxes increase. The company continues to use the profits to reduce debt, which fell to $46.4bn from $48.5bn in the previous quarter.

We have all noticed that prices are creeping up at the supermarket. On Tuesday, Unilever announced that it had raised prices on average 11.2% in the past 12 months. The maker of brands, including Ben & Jerry’s, Marmite, Domestos and Hellmann’s, reported sales growth of 8.1% as the price rises compensated for a reduction in volumes sold. The sales growth beat analysts’ forecasts of 7.2% and the company raised guidance for the full year. The firm held its quarterly dividend steady at €0.4268 and said that it had completed €750m of the €3bn share buyback announced last year.

Similarly, Reckitt Benckiser beat second-quarter sales expectations as it increased prices by 9.7%. The owner of brands such as Dettol, Strepsils and Nurofen saw demand increase year on year for its cold and flu products, as people began to mix again following the lifting of pandemic restrictions which were still in place this time last year.

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John Naylor, Chartered FCSI – Head of Investment Committee
John Naylor