Spreadex Market Update
Hopes of a Greek deal reverse yesterday’s sell-off; big movements for Tiffany and Michael Kors
News in the Eurozone has alternated between bearish talk about the chances of a deal being struck this week, and reports that, despite key disagreements still present between both sides, that a ‘staff level’ deal is being drafted. The increasing presence of the US has also helped, as Secretary of the Treasury Jack Lew warned against ‘brinkmanship’ over Greece with rumours that he has spoken to Tsipras ahead of pushing the issue at the G7 this week. Combine this with the usual bump from a falling to flat euro and the region found itself a bit more bullish about the Greek situation as Wednesday continued.
With both the US and the Eurozone relatively bullish, the FTSE followed suit as it was propped up by the reminder of a Tory majority (however slim) following the state opening of parliament alongside gains for Imperial Tobacco and CRH, both of which had good M&A news this Wednesday. Imperial Tobacco is set to snatch up 4 US cigarette brands following the takeover of its rival Lorillard, whilst CRH was boosted by the news that it is to take assets off the hands of LafargeHolcim.
Despite the post-bell resurgence of the dollar, which had spent the morning biding its time before briefly surging into life against the pound, euro and yen, the US markets managed to hold onto its gains. It was a tale of two luxury companies this afternoon. Tiffany & Co had suffered earlier in the year as it fell by around 17% in the middle of January following disastrous holiday sales; however, things seem to be improving and a near 12% jump after it released its better than expected, if not exactly sparkling, first quarter results puts it at its highest price since its post-holiday season stumble.
Michael Kors, on the other hand, looked on life support this afternoon as it fell 20% to its lowest price in over 2 years following the reveal of its slowest revenue growth since it debuted on the markets in 2011. Gains of 17.8% in revenue might sound impressive, but after being contextualized investors’ worries become much more understandable; Michael Kors’ lowest revenue growth in the past 13 quarters had been 29.9% (and its highest 74.4%), so a figure like 17.8% signals a rather rapid slowdown.
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