Must read: FTSE 100 rebound, US jobs report, oil, Adidas, IHG, Apple

Our head of investment rounds up the morning's big news.

GLOBAL MARKETS 

After slumping to a one-month low on Thursday, the FTSE 100 is trading higher, lifted by British Airways’ parent company International Consolidated Airlines Group SA (LSE:IAG) which has taken to the skies following first-quarter earnings. 

All eyes are on the US non-farm payrolls report on Friday, with investors looking for further signs that the labour market is cooling stateside. The consensus is for 180,000 job additions in April, the smallest monthly gain since December 2019. 

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Oil prices are staging gains, with WTI and Brent both higher by more than 1%, reversing some of this week’s losses, helping to lift oil stocks like BP (LSE:BP.) and Shell (LSE:SHEL) towards the top of the FTSE 100. However, oil is still on track for its third week of losses reflecting uncertainty about the global economic outlook and the threat of weaker demand, particularly from China.

ADIDAS 

adidas AG (XETRA:ADS) reported first-quarter sales of 5.27 billion euros, beating analysts’ expectations thanks to strong demand for the Terrace shoe as well as the Samba and Gazelle. Operating profit hit 60 million euros, quadrupling consensus forecasts for 15 million euros. However, it still reported a net loss from continuing operations of 24 million euros and gross margins declined. 

There appear to be green shoots of optimism for the sportswear giant which is still reeling from the Yeezy / Kanye West crisis after its partnership with Ye ended last year. This resulted in a 400 million euro dash to sales, hitting North America hardest and leaving Adidas with a huge pile of unsold shoe inventory. CEO Bjorn Gulden who took to the helm at the start of the year said 2023 will be a ‘bumpy year’ and the loss of Yeezy is ‘of course hurting us’. Adidas has also been grappling with cost inflation and the softening consumer backdrop which has led to greater discounting. 

Although shares fell sharply in October after its Yeezy deal terminated, shares have been rebounding over the last six months. Investors are also optimistic about new CEO Bjørn Gulden, thanks to his impressive CV including his recent nine-year term at Puma at which he helped spearhead the brand’s revival. 

INTERCONTINENTAL HOTELS GROUP 

Keith Barr is stepping down as chief executive of InterContinental Hotels Group (LSE:IHG) on 30 June and will be replaced with Elie Maalouf, the current Americas CEO on 1 July. Barr will remain available to support and advise the business until the end of the year. He has been CEO since July 2017 and on the executive committee since April 2011. Barr helped steer the hotel group through the extreme challenges of the pandemic and Brexit with shares up around 30% under his near six-year tenure, sharply outperforming the FTSE 100. He recently chimed in on the debate about City of London’s position as a global financial hub after Brexit saying it is ‘not a very attractive place to list new companies’ but IHG remains listed on the LSE nonetheless.   

IHG reported revenue per available room (RevPAR), which is calculated by multiplying average daily room rates by occupancy rates, up by 33% year-on-year and 6.8% versus 2019 as the group behind Holiday Inn hotels enjoys a post-pandemic bounce back. Greater China was a bright spot with RevPAR up 75%, thanks to Beijing’s removal of its anti-Covid lockdown measures and the release of pent-up demand from the world’s second-largest economy. Business and group travel continues to bounce back post Covid however IHG flagged the ‘ongoing economic uncertainties’ and said financing challenges are holding back new hotel development activity and the wider real estate industry. 

Last year, IHG launched its biggest marketing campaign in a decade and overhauled its One Rewards scheme, helping add millions to its loyalty programme and boosting occupancy rates. 

Shares in IHG have enjoyed a strong year-to-date performance up around 11% but are under pressure today, reflecting the departure of its CEO. IHG is also lagging US rivals Hilton and Marriott so far in 2023 both in terms of forward PE ratios and percentage gains.

APPLE 

Apple Inc (NASDAQ:AAPL) reported fiscal second-quarter earnings which topped analysts’ expectations, with earnings per share hitting $1.52 versus estimates for $1.43. Revenue reached $94.84 billion also ahead of forecasts for $92.96 billion and gross margin came in at 44.3%, again outpacing consensus estimates. This was largely thanks to a ‘significant acceleration’ in iPhone sales which make up more than half of the tech giant’s overall revenue. 

However, other hardware such as Mac sales disappointed, falling 31% and iPad revenues fell 13% year-on-year as the pandemic era tech boom (when we were glued to our devices at home) fades. Apple is trying to focus more on services such as Apple TV+, Apple Music and Apple Pay. This division saw revenues reach another record high, up 5.5% to $20.91 billion despite the macroeconomic headwinds. 

Shares in Apple gained more than 2% after-hours trading, lifting the stock to a gain of more than a third since the start of 2023 as it continues to rebound after last year’s ‘tech wreck’ which sharply punished the sector.