Good news from China, worries about UK wage growth implications, EasyJet upgrades guidance and MoneySuperMarket bounces back

“A mixed set of economic and corporate news has brought a new wave of uncertainty to the markets. While China’s economic growth has accelerated, so too has UK wage growth which puts the Bank of England in a difficult situation. It muddies the water with regards to the situation with inflation and hopes that the central bank would have enough reasons to stop putting up interest rates,” says Russ Mould, Investment Director at AJ Bell.

“The Bank might argue the situation is a watching brief, not firm evidence of a trend with wage growth, and so it needs more data points before making any big decisions.

“As for China, the relaxation of Covid restrictions was always going to result in stronger economic activity. The key question is for how long it can sustain this momentum. GDP grew by 4.5% in the first three months of the year.

“A suggestion last week that US banks hadn’t been badly affected by the recent crisis in the financial sector looks a bit premature. State Street has fallen victim to a rush of depositors withdrawing money either to park in a different bank or in lower-risk investments such as money market funds or government bonds. The same thing has happened with Charles Schwab and M&T.

“Competition is heating up in the deposit market which means banks are going to have to offer better rates to attract and retain customers, while at the same time we could see banks become pickier over the type of customer to whom they are prepared to lend money, suggesting that earnings in the sector could become less attractive.

“While Asian markets were mixed, Europe saw small gains across the main indices. The FTSE 100 nudged up 0.3% to 7,903 thanks to strength in miners off the back of the better-than-expected China GDP figures.”

Easyjet

“A lot of things are going right for EasyJet following a long period of patiently waiting for the airline industry to recover from the pandemic.

“It is flying more passengers, ticket prices are higher, growth for its package holidays arm is better than expected, and it has lifted full-year profit guidance.

“However, it is still fighting higher fuel and operating costs and the return of air traffic control strikes.

“The big unknown is demand for last-minute breaks. While advance bookings have been encouraging, the more plane tickets go up in value, the more certain people will be priced out of taking a foreign holiday.

“Many people book closer to the desired departure date, but there is a good chance a large chunk of this group will get to May or June and realise it is going to cost them more than they thought for a week of sun and sea.

“Jet fuel prices have been falling, yet airlines are unlikely to cut their ticket prices when they’re still playing earnings catch-up from the pandemic. The industry will probably take the bet that consumers cave into higher prices and accept their holiday is going to cost more this summer. That’s a risky move, but airlines have form in getting every last penny from the customer.”

MoneySuperMarket

“Comparison site MoneySuperMarket has made an encouraging start to 2023 as people become more active in switching to save money on credit cards, car insurance and the rest.

“Holidays tend to lift the mood and they are undoubtedly boosting sentiment at MoneySuperMarket, as people get online to seek out the best deals to insure their latest trip.

“The post-Covid return of travel insurance has helped to make up for the pause in switching in the energy market as deals dried up amid surging wholesale prices. Now there are hints energy could be coming back before too long.

“There is an argument that MoneySuperMarket’s services have never been more crucial. With households watching every penny the incentive to look for a better deal on regular bills is as high as it has ever been.

“Price comparison remains a highly competitive market and that means a chunky marketing cost for MoneySuperMarket to keep its brand front of mind. Though it does have an advantage due to its longevity and existing brand awareness.

“The company is also innovating to offer services around areas like automatic switching and partnerships with third parties to help give customers a greater depth and breadth of information to make their decisions.”

These articles are for information purposes only and are not a personal recommendation or advice.