Daily market update: European shares move higher amid progress with Trump tax-cut bill, Greggs, AstraZeneca

“It’s a solid day for European equities as all the major indices moved higher amid progress in the US on policy plans to lower taxes and progress with trade negotiations,” says Dan Coatsworth, investment analyst at AJ Bell.

“Commodity producers, financials, utilities and industrials led the way on the UK stock market. The fact both risk-on and defensive sectors moved higher would suggest a general sense of optimism among investors.

“The US Senate has passed Donald Trump’s tax-cut and spending bill which means the attention now shifts to the House of Representatives for approval. At the same time, there were developments on trade talks between the US and India which gave investors some encouragement. Trump seems optimistic about striking a deal with India, yet there would still be a long list of other countries that need to do the same before 9 July if they want to avoid high tariffs.

“SSP saw its shares jump on progress with demerging its Indian travel food arm with the implied valuation looking higher than expected. Mid-cap software group Bytes Technology crashed after flagging that customers were delaying purchase decisions.”

Greggs

“A mild profit warning from Greggs has taken a bite out of its share price. Companies love to blame the weather for poor sales but it’s normally down to rain and low temperatures rather than sunshine and heat.

“Greggs says the hot weather has reduced footfall and that’s led to a cut in profit guidance. We’ve only had a few days of the temperature being uncomfortably high so one might suggest sausage roll king Greggs is telling porkies. It might simply be that shoppers are losing their appetite for the brand.

“In general, the past few months have been glorious weather-wise and that should have driven more people out of the house and onto the high street.

“During a period of hot weather, one would expect the product sales mix to change, with fewer hot pastry-based products and greater demand for salads and cold drinks. Overall, Greggs should have still benefited from the sunshine. It begs the question of whether Greggs is simply using the weather as a reason to mask bigger problems.

“Even though Greggs continues to open new stores and talk up opportunities, on a like-for-like sales basis it is having to work extra hard to make progress. The shares have been weak since last September as investors ask if we’ve reached peak sausage rolls territory and the latest trading update is only going to add to market fears.”

AstraZeneca

“Reports that AstraZeneca wants to move its stock listing to the US looks to be driven by business needs rather than chasing a higher valuation.

“AstraZeneca generates about 42% of its sales from the US and it already has plans to increase its operational footprint in the country. America is important to its growth strategy and it could become an even bigger cog in the wheel.

“The CEO seems frustrated at the lack of financial support to open new laboratories and manufacturing facilities in Europe and might see a full US stock listing as a stepping stone to receiving better treatment Stateside.

“It won’t be an easy move to pull off as unlike many other UK market ‘defectors’ with a dominant US shareholder base like CRH and Flutter, AstraZeneca has a more geographically diverse pool of investors.”

These articles are for information purposes only and are not a personal recommendation or advice.