European equity markets are largely lower as we approach the end of the trading day.
Europe
Even though the FTSE 100 and DAX are in the red, the fear factor has greatly reduced in the wake of the People’s Bank of China (PBoC) fixing the yuan at 6.9683. The fact the PBoC slighted strengthened the currency in reaction to the US accusing them of currency manipulation has been seen as a sign that Beijing are easing up on their stance a little. Traders are treading lightly, but things could have been a lot worse when you look at the early losses suffered overnight in Asia before the PBoC made their move.
Boohoo acquired Karen Millen and Coast for £18.2 million, and group acquired the company using its cash resources. Boohoo bought the online business and all the intellectual property rights associated with the group. It is clear that Boohoo are keen to keep expanding ,seeing as they were acquiring distressed assets, traders viewed it as snapping up at assets at a bargain.
Sirius Mineral confirmed it has put on hold its plans to raise $500 million from a bond issue until ‘current market conditions’ improve, and the group intends to revisit the financing issue later this quarter. The $500 million is essential for the frim to gain access to the revolving credit facility it has in place with JPMorgan. The wider financing facility is crucial to the development of the site in Yorkshire, so Sirius is dependent on a quick change in the wider investment sentiment in order to progress. The stock price is likely to remain subdued until the bond issue is held.
Rolls Royce confirmed that first-half operating profit increased by 32%, and revenue rose by 7%. The company is making improvements with respect the Trent 1000 engines – which previously been very costly for the group. Cash flow is expected to improve in the second-half as civil aerospace and the trading of power systems are tipped to generate more cash flow in the next six months. Rolls Royce CEO Warren East confirmed the group saw ‘further progress’ and is performing in line with the full-year expectations.
US
US stocks have rebounded a little on the back of the Chinse central bank strengthening the yuan a little. The move has been viewed as a sign that the Chinese authorities are open to negotiations, but at the same time they can use the yuan as a weapon against the US.
Aurora Cannabis announced a positive update, and the news sent the stock higher. The company said it expects fourth-quarter cannabis revenue to be between $90 million and $95 million, and it anticipates that that production available for sale in the fourth-quarter will be at the upper end of the guidance of between 25,000 KG and 30,000 KG. The bullish update helped the stock trade higher this afternoon.
Dean Foods revealed disappointing quarterly figures, and the stock slumped on the update. The second-quarter loss per share was 36 cents, and traders were expecting a loss of only 17 cents, adding to that, the revenue was $18.4 billion, and that narrowly missed forecasts too. The group cited an ‘accelerated decline’ in the traditional white milk market for the poor figures. The company is striving to become more cost-effective, but until dealers see results, traders are likely to avoid the stock.
The JOLTS report came in at 7.34 million, while economists were expecting 7.31 million. The update backs up the latest non-farm payrolls report that the US jobs market is in good shape.
FX
GBP/USD has pushed higher again as the currency pair continued to pull back some of the ground lost last week. The fear surrounding a no-deal Brexit is still doing the rounds, but traders seem to have shrugged it off, but that is not to say the fears won’t resurface.
EUR/USD is in the red as traders take some profit on recent gains. The simmering of tensions between the US and China has seen funds flow back into the US dollar, and that has put pressure on the euro. German factory orders jumped by 2.5%, which was a big improvement on the 2.2% decline in May.
Commodities
Gold continues to benefit from the nerves in relation to the US-China trade situation. The metal hit a new six year high overnight, and even though it retreated a little on the back of the PBoC yuan fix, the bullish move is still intact, and resistance might be found at $1,485.
Oil is subdued as US-China tensions cool a little, but concerns still remain in relation to the health of the global economy. A protracted trade dispute between the world’s two largest economies is looming over global growth, and in turn the energy market.
