Must read: FTSE 100, UK retail sales, Bitcoin, Credit Suisse, Cineworld

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

GLOBAL MARKETS 

After the FTSE 100 logged its third consecutive weekly gain last week, the UK index has opened higher again, close to breaking above resistance at 7,800. Mining stocks are leading the charge, with Glencore (LSE:GLEN), Rio Tinto Registered Shares (LSE:RIO), and Antofagasta (LSE:ANTO) trading towards the top of the FTSE 100. 

European markets more broadly are trading in the green, with UBS Group AG (SIX:UBSG) up by over 1.8% after JP Morgan raised its price target on the stock from CHF 23 to CHF 27. The Swiss parliament is holding an extraordinary session today to discuss the UBS, Credit Suisse Group AG (SIX:CSGN) deal. 

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The International Monetary Fund (IMF) has said interest rates are likely to fall in the UK and other advanced economies. The fund said "recent increases in real interest rates are likely to be temporary." The IMF estimates that Britain’s natural rate of interest would stand at 0.3% by 2050, down from its previous estimate of 0.4% from before the pandemic. 

Markets rallied overnight in Asia, with the Nikkei, Aussie ASX 200 and Korea's Kospi closing over 1% higher. China’s annual inflation rate hit 0.7% in March, falling from 1% month-on-month to mark the lowest reading since September 2021. Producer prices slumped by 2.5% in March, marking the sixth straight monthly decline and the steepest fall since June 2020 on the back of softer commodity prices. 

US President Joe Biden is heading to Northern Ireland to mark 25 years since the Good Friday Agreement. Focus for markets this week is on US inflation figures and the FOMC minutes both on Wednesday.

UK BRC RETAIL SALES MONITOR 

UK BRC retail sales rose by 5.1% year-on-year in March, slowing slightly from February’s reading of 5.2%. 

Rising prices are masking a slowdown in volumes of goods sold as individuals and households are forced to spend more pounds on fewer items, flattering the retail sales figures. Inflation is stuck in double digits at 10.4% in the latest data for February. This is adding to cost-of-living pressures on consumers who are struggling with falling real wages, expensive bills for essential items, rising interest rates and a sluggish economic backdrop. 

Rainy conditions in the UK reduced demand for retail spending during March as many would-be shoppers opted to refrain from visiting high streets. Fashion, gardening, and DIY products all suffered from weaker spending in the latest figures. However, Mother’s Day celebrations helped to offset this to some extent, providing a tailwind to spending on gifts like flowers and perfume. 

BITCOIN 

Bitcoin surpassed the psychological resistance level, $30,000 for the first time since June as the 2023 crypto rally continues. Bitcoin is up 80% against the US dollar so far this year but remains sharply below the peak from the final quarter of 2021. 

Turmoil in the banking sector and speculation that the Federal Reserve could be nearing the peak of the rate hiking cycle have bolstered demand for cryptos, helping bitcoin stage a recovery after it logged a more than 60% slide last year, its second-worse annual performance on record. There is growing speculation that bitcoin is at the start of another bull run. Shorts have been getting squeezed this year, prompting more buying as the bears rush to cover their losing positions. 

HEATHROW 

More than 6.2 million passengers flew through Heathrow Airport in March, a million more than in February. 31 March was one of its busiest days since 2019 with 221,606 travelling passengers. CEO John Holland-Kaye said ‘passengers got away smoothly on their Easter holidays’. 

Post-pandemic international travel continues to grow with strong demand in March at the beginning of the Easter school holidays. However, the airport continues to face headwinds from industrial action, weaker business travel demand after Covid with the rise of video meetings online, and the cost-of-living crisis which makes affording international travel more challenging.

CINEWORLD 

Cineworld Group (LSE:CINE) has filed a reorganisation plan with the US Bankruptcy Court for the Southern District of Texas. The plan does not provide for any recovery for holders of Cineworld’s existing shareholders. During the process, Cineworld will continue to operate its cinemas without interruption and all customer membership programmes will be honoured. 

Shareholders in Cineworld have had a tough time with this stock, which is down around 95% over the last year. Given the level of existing debt, existing equity interests will not be recovered in another blow to shareholders. Cineworld was hit hard during the pandemic when cinemas were forced to close, Hollywood wasn’t churning out hits, and online video streaming growth exploded. 

Cineworld failed to find a buyer for its business in the US and the UK, forcing the cinema chain to file for Chapter 11 bankruptcy after it struggled under the weight of billions of dollars of debt.