US markets managed to eke out a small gain last night after undergoing a rollercoaster session, while Asia markets have managed to maintain a degree of stability after the latest China trade numbers showed that exports improved in July with a rise of 3.3%, despite the recent tariffs increases. These numbers showed that while exports to the US were down by 2.4%, exports to other countries were able to take up the slack.
The reason for this is perhaps not too much of a surprise when you look at the yuan, which has declined significantly in the last quarter, making Chinese exports much more competitive to other countries.
Imports declined 5.6%, though this was also slightly better than expected.
Nonetheless, while Asia markets were able to finish higher and markets here in Europe are building on yesterday’s gains there remains little prospect of a swift resolution to the current impasse between the US and China, as the People’s Bank of China fixed the yuan above the 7.00 level for the first time since 2008.
This means that for this rebound to gain further momentum we would need to see evidence of a softening of the rhetoric around trade, and a willingness on the part of both parties to dial back their current positions.
The rebound in equity markets is also being helped by a rebound in yields in bond markets after yields hit record lows in Germany and the UK yesterday, and three central banks, including the RBNZ and Reserve Bank of India slashed their benchmark lending rates.
Aviva’s latest half year report showed that operating profits rose by 1% to £1.45bn, with its life business contributing the lion’s share of that number, though profits in this area declined 8%, compared to a year ago. An increase in general and health insurance of 29% helped offset the decline here. Fund management was also an area that saw lower profits.
Hargreaves Lansdown full year results saw net new business rise by £7.3bn, a slight decline from the same period a year ago, however assets under management rose 8% to £99.3bn.
Profits before tax increased to £305.8m, a rise of 5%, with management at pains to apologise for the unwelcome press coverage and the impact on clients around the problems and gating of the Woodford Equity Income fund.
To that end CEO Chris Hill said that the company would learn lessons from recent events and said he would also forego his bonus as a consequence.
When Cineworld took the decision last year to expand into the US it was widely perceived to be a high stakes gamble, particularly given the cost of acquiring Regal Entertainment was on the high side at $3.6bn. The company was also in the middle of refurbishing its cinema real estate in the UK.
Today’s first half numbers look disappointing when compared to a year ago which the company has blamed on unfavourable release timings. Admissions were down 14% at 136m, while revenues fell by 11.1% on a pro-forma basis to $2.15bn.
While management have said that the numbers are in line with expectations they are still disappointing and will have to hope that the release of new films like the latest film in the Star Wars saga, “The Rise of Skywalker” will be key in meeting guidance expectations for the rest of the year.
BT is amongst the biggest fallers on the FTSE100 along with Lloyds Banking Group as they go ex-dividend.
The US dollar is coming under a little bit of pressure today, with the pound starting to regain a little bit of ground as pressure on the downside starts to subside a little.
While markets in Europe appear to be regaining a sense of equilibrium, with some decent gains today, US markets look set to open modestly higher as well, after a rollercoaster session, with the focus set to remain on earnings and economic data.
Weekly jobless claims are expected to remain low at 215k, while investor attention is set to focus on the last nights latest numbers from Lyft.
The shares have languished in the wake of their $70 IPO back in April. Operating losses in Q1 came in at $211.5m, on revenues of $776m. This improved in Q2 with revenues of $867.3m, well above expectations of $800m.
Losses, on the other hand were much bigger than expected, coming in at $644.2m, though as in Q1, some of this loss came from post IPO stock compensation. Stripping that out and losses came in at $197.3m. The company said it expected losses to narrow over time, but didn’t give a time frame as to when it might be expected to make a profit.
Today is also set to be a big quarter for Uber, its first as a publicly listed company and another tech company that is haemorrhaging cash at a rate of knots, but which has seen its share price gradually recover from the big falls seen in the wake of its IPO in May. Pricing at the lower end of its $44 to $50 IPO range the shares dived to as low as $36 and have slowly clawed those losses back. Whatever the reasons for the recovery the numbers don’t lie and show that the company is a long way from being profitable.
The business has continued to grow, last year saw it reach 91m users, and generated $9.2bn from its taxi business. Its food business also saw a 149% rise in revenues to $1.5bn, however with losses at $3bn last year, and the company laying off 400 people in the past month, there must be concerns that the company will ever get closing to making a return for its shareholders. Expectations are for a loss of $2.33c a share.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.