Market Roundup

Spotlight on a Company

NatWest struggled with their share price this week despite a surge in profits in the third quarter. They set aside £242 million to cover struggling loans during the pandemic, which has now been released, increasing their pre-tax profits to £1.07 billion from £355 million at the same time last year. A strong recovery like this would usually boost the confidence of investors and see them snapping up shares quickly, however this was not the case. Competitors Lloyds and Barclays, both saw solid returns in the third quarter, hence NatWest’s figures were expected to exceed last year’s by some way. The speculation of high pre-tax profits subsequently being met by NatWest, reduces the surprise that the bank has recovered from the pandemic well, which could explain the underwhelming share price. The NatWest share price has been high all year, up 35% so far, highlighting further surprise that the share price closed at 221.40p from a year high of 235.00p. Despite a disappointing end to the week, if NatWest’s third year figures are anything to go by, this year will see profits back up to and exceeding pre pandemic levels.

FTSE 100

The FTSE 100 closed on Friday trading at 7,221.39. This is a fall of 0.4%, relatively modest compared to fluctuations that have been seen recently. The main faller was NatWest who saw their share price plummet by 4.45% after an underwhelming reaction to their third quarter figures.

A key riser in the FTSE 100 was ITV, up 3.07% at 107.65p by the end of trading on Friday. This is an increase of a massive 51.8% since October last year, with the forecast for 2022 looking just as prosperous as it has been so far this year.

Darktrace, a cybersecurity firm had a shocking start to its first week in the FTSE 100 after analysts knocked a fifth of the company’s valuation days before it entered the market. Analysts raised concerns about the quality of the products that Darktrace offer and questioned their target market. This indicates the sheer influence of market analysts and speculators who can influence the share price so dramatically despite the trebling of the company’s value since its shares were first listed in April.

Despite this shocking start in the FTSE 100 for Darktrace, there was a slightly more promising end to the week, as their shares were up 2.95% at 804.50p by the end of trading on Friday. Revenue increased 41.3% for the company in the last year, indicating high growth prospects and returns in 2022, giving a promising future for the firm despite their early shock.

S&P 500

The S&P 500 closed on Friday at an all-time high - a booming market compared to that of Europe. The Federal Reserve has introduced liquidity measures to aid economic recovery and with the S&P 500 nearing the key 4600 figure, it seems these policies are working. The forecast is promising with the current 50 day exponential moving average (EMA) at 4444, inching closer to the significant 4600 figure.

Data published on Tuesday showed consumer confidence to be up for the first time since June this year. Combine this with investors not worrying so much about rising input costs and supply chain issues, we get a promising period to come for the American stock market.

Nikkei 225

A similar picture can be seen in Japan with the Nikkei 225 closing at a higher price than where it started, up by 0.25%. Key risers of Friday were Fuji Electric Co. which rose a staggering 11.78% and Mitsui O.S.K. Lines adding 9.48% to its value.

Fallers included Alps Electric Co. whose share price fell by 6.41%. Overall, fallers outnumbered risers on Friday, however promisingly, the market still managed to close higher than Friday’s opening price.

Summary

Overall, US markets are outperforming their European counterparts currently. It is thought this is down to the European Central Bank remaining unchanged on their interest rate policy to maintain stability, while hoping that this will mean spending is back to the target level by the end of the year.

Similarly, Asian markets are growing vastly compared to the more reserved recovery of the European Markets. Encouragingly, the Nikkei Volatility measure, which measures expected the volatility of the market unsurprisingly, stayed constant at 21.04, indicating that a boom in the market is sustainable and not a one off shock.

Around the world, markets seem to be recovering well to the increase in economic activity from an easing of lockdowns. Growth appears sustainable and looks promising going into trading in 2022.