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Equities edge higher in advance of Jackson Hole

Equity markets in Europe are higher this morning as investors look ahead to the Jackson Hole symposium, which starts today. 

The convention for central bankers is the highlight of the week in terms of economic events. All eyes will be on Mario Draghi, the President of the European Central Bank (ECB), as his commentary, could shape trader’s outlook. The ECB have an aggressive stimulus package in place, but they are running out of bonds to buy, and dealers are wondering what creative way Mr Draghi will come up with to keep the policy loose while not snapping up all the government securities that are available to purchase.

Dixons Carphone issued a profit warning today and the share price is off 26% on the back of it. Analysts were forecasting profits to be in the region of £497 million, and now the company stated it expects profits to be between £360 and £440 million. The profit warning is down to changes in how the company sells its software. Adding to the company’s problems, it also warned the British market for mobile phones is ‘more challenging’. The change in EU roaming rules will cost the company in between £10 and £40 million this year. The collapse in the share price today has rattled investors, and since the share price has been in a clear downward trend since late 2015, the outlook for the share price is negative. 

The GBP/USD is a touch lower today as we have seen a general strengthening of the US dollar. The UK announced the second reading of GDP for the second quarter. On a quarter-on-quarter basis it was 0.3% and on a year-on-year basis, it was 1.7%, both meet expectations. The growth didn’t have much of an impact of the pound.

We are anticipating the Dow Jones to open 21 points higher at 21,836, and we are calling the S&P 500 flat at 2444.

At 1.30pm the US will announce the initial jobless claims report, and economists are anticipating an increase to 238,000 from 232,000 last week. The US will reveal the existing home sales report for July at 3pm, and the consensus is for a reading of 5.57 million, and that compares with 5.52 million in June.

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