Alphabet and Nestlé Beat Estimates as Markets Rally

Alphabet and Nestlé Beat Estimates as Markets Rally

Alphabet and Nestlé surpassed sales forecasts, helping drive a global market rally, with US stock futures pointing upward and Japan’s Nikkei gaining over 2%. The US dollar strengthened against the euro and Swiss franc, while markets brushed off ongoing uncertainty over President Trump's tariffs and conflicting reports on US-China trade talks. Meanwhile, earnings warnings from firms like Fanuc, P&G, and American Airlines suggest potential economic headwinds, and geopolitical tensions remain high following a deadly missile strike in Kyiv.

Equities

The FTSE 100 was flat on Thursday as investors absorbed a series of company updates and continued to assess the implications of shifting US trade policies. The FTSE 250 edged up 0.1%. Inchcape fell 7% after reporting a drop in first-quarter revenue and warning that tariff uncertainty could hit supply chains and dampen demand. Legal & General dropped 5.7% as it traded ex-dividend.

Shares in Unilever dipped 0.5% despite the consumer goods group beating first-quarter sales estimates; management said the direct impact of tariffs should be limited. ASOS rose 2.1% after it reported better-than-expected half-year earnings and said it was on track for further growth in 2025. Meanwhile, heavyweight banks dragged on the index, falling 1.6%, while metal miners gained as copper and gold prices remained firm.

In the US, all major indices rose strongly, with the S&P 500 up 2.03%, the Dow gaining 1.23%, and the Nasdaq climbing 2.74% thanks to strength in large-cap tech names. The technology sector led the S&P 500, gaining 3.5%.

ServiceNow jumped 15.5% after reporting better-than-expected results driven by ongoing demand for its AI-powered software. Hasbro shares climbed 14.6% following strong results from its gaming business. Alphabet shares rose after hours after beating revenue expectations, adding to positive momentum in tech.

Procter & Gamble fell 3.7% and PepsiCo dropped 4.9% after both companies trimmed or withdrew guidance, citing continued uncertainty in consumer behaviour. American Airlines and Chipotle also revised guidance downward.

Among economic releases, US March durable goods orders rose more than expected, while jobless claims remained steady, pointing to underlying strength in the economy. On the policy front, Beijing called for the removal of US tariffs, and Treasury Secretary Scott Bessent said current tariff levels are unsustainable, while ruling out unilateral reductions. These comments helped ease pressure on chip stocks, which have been central to recent trade tensions.

In the UK, Bank of England Governor Andrew Bailey said the central bank remains concerned about the broader impact of global trade disruption and is watching developments closely ahead of its rate decision on 8 May. Markets are pricing in a 25-basis point cut.

Forex & Commodities

The US dollar climbed sharply on Friday, rising 0.7% against the yen to 143.67 and gaining 0.6% against the Swiss franc, following a Bloomberg report that China is considering suspending some of its 125% tariffs on US imports. The dollar index rose 0.4% to 99.79, heading for a 0.6% weekly gain that would break a four-week losing streak. The euro slipped 0.5% to $1.1327, while sterling dropped 0.4% to $1.3287. Investors responded to signs of progress in trade talks with Japan and South Korea, as well as to conflicting statements from Washington and Beijing over whether discussions are underway.

Gold prices fell more than 1% as the dollar strengthened and appetite for safe-haven assets eased. Spot gold dropped to $3,302.81 an ounce, while US gold futures declined to $3,312.80. The drop follows gold reaching record highs above $3,500 earlier in the week. Silver, platinum and palladium all traded lower too, down 0.6%, 0.9% and 1.7% respectively. Gold’s recent rally has been driven by investor concern around global instability, but renewed hopes of tariff relief between the US and China reduced short-term demand.

Oil prices edged higher on the day, but remain down for the week. Brent crude rose 0.5% to $66.85 per barrel, while WTI gained to $63.12. Despite Friday’s gains, both benchmarks are on track for a weekly decline of around 2% due to concerns about oversupply. OPEC+ is expected to discuss accelerating production increases at its June meeting. Analysts noted that stronger US gasoline demand has supported prices in recent days, though overall consumption remains below forecast.

On the central banking front, the Bank of Japan reiterated its commitment to rate hikes if inflation progresses towards its 2% target. However, it signalled caution due to the potential economic impact of US tariffs. Japanese core inflation in Tokyo rose 3.4% in April. Federal Reserve officials said they are in no rush to change policy, citing the need for more clarity on the economic effects of US-China trade tensions.