Must read: US inflation, UK retail sales, BP

GLOBAL MARKETS

European markets have opened lower this morning, with the DAX and CAC leading the charge while the FTSE 100 is nursing more limited losses partly thanks to gains for BP (LSE:BP.) following a positive update from the oil giant.

Halma (LSE:HLMA) is at the top of the UK blue-chip index this morning after analysts at Barclays raised the stock to 'overweight' from 'equal weight' and lifted its price target.

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Markets await the latest US inflation figures due out for March later today. Consensus is for CPI to have risen by 3.5%, up from 3.2% in February, while core inflation’s 12-month change is expected to come down to 3.7% from 3.8% and the monthly reading to 0.3% from 0.4% in February. There are concerns about the recent rise in energy prices which could get in the way of inflation’s path back down to target. 

Meanwhile, the markets are reducing their expectations for Federal Reserve rate cuts this year. After March’s strong payrolls report, Fed funds futures now anticipate around 60 basis points of cuts in 2024, down from around 150 basis points at the start of the year. Former Fed President James Bullard said he expects three US interest rate cuts this year.

UK RETAIL SALES 

Retail sales rose the most since August last month. According to the British Retail Consortium, like-for-like retail sales in March rose by 3.2% year-on-year, up from 1% in the previous month. Total sales rose by 3.5% year-on-year, rising from 1.1% in February. 

This year, Easter Sunday fell much earlier than last year, providing a boost to food and drinks spending in March in the days leading up to the long weekend. The economy has also been rebounding this year thanks to easing inflationary pressures and strong wage growth, helping to drive improved spending after a lacklustre end to 2023 when the UK economy fell into a short, shallow recession.

However, the boost from Easter and improving economic dynamics were partially offset by wet weather conditions, with much higher-than-average rainfall last month weighing on sales of garden furniture, home improvements, and spring clothing collections.

BP 

BP says it expects a strong first quarter for oil and gas trading as well as a quarter-on-quarter improvement in upstream production of low-carbon energy and oil & gas. It also expects an improvement to its oil refining margins this quarter when it reports results on 7 May, the first set of earnings since Murray Auchincloss became permanent CEO in January following the abrupt departure of Bernard Looney last year. 

It looks like BP is poised for another strong quarterly scorecard after results in the final three months of 2023 outpaced expectations and the new CEO enticed investors by ramping up BP’s share buyback programme. Supporting BP and its rivals is an upward trend for underlying oil prices, with geopolitical supply shocks and improving global demand pushing Brent crude above $90 a barrel this month, reigniting the possibility of $100 oil again in the months ahead.

BP shares are in the green this morning, extending recent gains with the stock up around 10% year-to-date. This morning’s rally reflects the company’s upbeat early indication of its performance in the first three months of 2024. 

There’s an overall positive assessment on BP from the analyst community too, with 16 buy recommendations, four holds and just one sell on the stock with an average price target up around 19% from the current share price.