Market movers: FTSE 100 starts higher, oil, house prices, Moonpig

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

EUROPEAN MARKETS

European markets are staging gains this morning with the DAX up by nearly 1.5%, while the FTSE 100 has pushed above 7,450 as it looks towards 7,500 as the next near-term resistance hurdle. Most stocks in the UK index are in the green with Kingfisher (LSE:KGF) leading the charge thanks to its surprise share buyback announcement.

US futures are pointing higher after the Dow logged its eight consecutive weekly decline and after the S&P 500 briefly fell into bear market territory on Friday before clawing back earlier losses into the close.

OIL

Oil prices are moving higher, with Brent crude back above WTI as Shanghai prepares to ease its two-month lockdown, alleviating some concerns about softer demand from China. Plus stronger demand is also anticipated from the United States heading into peak US driving season from the Memorial Day weekend at the end of May until Labour Day in September. After an impressive period of gains for the US dollar, last week the greenback pulled back from overbought levels also helping to support oil markets.

RIGHTMOVE HOUSE PRICES

UK house prices saw their biggest jump since 2014 in May. According to Rightmove, asking prices on sale between mid-April and mid-May rose by 2.1% following a 1.6% increase in the previous month with prices now 10.2% higher than a year ago.

Although asking price data tends to overinflate the market given that agreed sale prices usually come in below, the shortage of housing supply and historically low interest rates continue to support a buoyant market.

After last year’s stamp duty holiday, the furlough scheme which underpinned strength in the labour market and other covid-era fiscal and monetary stimulus, the housing market has been going from strength to strength.

However, there are concerns that the housing market’s peak could be approaching as near 10% inflation, rising interest rates and an anticipated economic slowdown take their toll on buying and selling activity with prices likely to soften over the next six months to a year.

MOONPIG

Moonpig (LSE:MOON) said it had agreed to buy Smartbox, the gifting experience platform behind Buyagift and Red Letter Days for £124 million in cash. The company said there is a ‘strong strategic rationale’ and a ‘compelling financial benefits’ from the tie-up. The deal is expected to cross the line by the end of July.

Shares in Moonpig have jumped more than 13% as investors cheer the acquisition of this cash generative, high growth business. While Moonpig is best known for selling greetings cards online, its plans to expand further into gifts via this acquisition could help broader its product offering and boost margins, particularly for some of the more expensive add-on products beyond its bread and butter. Moonpig is also likely to benefit from significant synergies as the two businesses overlap and come together to save costs.

After an initial surge on IPO day last year, Moonpig shares have struggled alongside other UK tech companies like TGH. With shares down around 40% since the January high, today’s acquisition comes as a welcomed update for investors and arguably could mark the start of a more bullish phase for the online greetings cards business.