Market movers: European stocks, oil, UK borrowing, Softcat 

Victoria Scholar, interactive investor's head of investment, runs through today's big stories and how financial markets are reacting. 

EUROPEAN MARKETS

European markets have opened on a positive note with the energy and banking sectors leading the gains. Financial stocks and the US dollar have caught a bid on the back of comments from Federal Reserve Chair Jay Powell, who signalled the potential for a more hawkish path ahead for US monetary policy, opening the door to a possible 50 basis point hike. The FTSE 100 is trading higher, with 7,500 as the next round number resistance to watch. China-exposed stocks such as Prudential (LSE:PRU) and HSBC Holdings (LSE:HSBA) are trading at the top of the UK basket, bolstered by a rally in Asia overnight with Chinese tech stocks leading the charge.

OIL

Oil started the session strong, having surged 7% on Monday, but has since turned negative with Brent crude retreating back below $115 a barrel. This week’s rally has been driven by the divide between European Union foreign ministers over whether to follow the US and the UK by banning Russian oil, amid concerns about EU’s energy. This has prompted fresh supply concerns in a market that is already grappling with a significant demand-supply imbalance, bolstering the value of both WTI and Brent crude again. However, the shift from green to red suggests some traders are taking profit after Monday’s jump and serves as a reminder that this is a highly volatile and uncertain period for the market.

UK PUBLIC SECTOR NET BORROWING

UK public sector net borrowing hit £13.1 billion in February, an improvement from £15.5 billion in the same month last year. VAT revenues in February jumped 18.3% year-on-year, which should help the full-year total deficit come in around £30 billion below the OBR’s previous forecast outlined last October. However, rising interest rates have pushed the government’s interest payments to the highest level since records began in 1997.

Even though the government is battling rising interest payments, it has support from a tightening labour market and rising inflation, which have led to higher wages and spending in the UK economy, bolstering the government’s tax receipts and on balance flattering the public purse. The data comes at a good time for the Chancellor, who will highlight these fiscal improvements when laying out his plans to tackle the cost-of-living crisis in tomorrow’s Spring Statement.

SOFTCAT

Shares in Softcat (LSE:SCT) are surging, jumping more than 9% at one stage after the IT company reported a forecast-topping first-half operating profit up 12.4% to £64.1 million. Revenue grew by 22.6% to £770.9 million. As the war in Ukraine shines a light on the risks around cybersecurity, the IT company announced plans to up its cyber defences.

Having shed more than a third of its value from September to March, this month sentiment has appeared to have shifted on the stock, sending the share price in a more positive upward trajectory. There is a sense that the selling was overdone and that easing supply chain problems could provide a tailwind in the months ahead. Plus the company is relatively shielded from the current risk environment, prompting a number of analyst upgrades on the stock.