European equity markets are largely in positive territory as the trading session draws to an end. 

Europe

The FTSE 100 is flat as internationally exposed stocks like British American Tobacco, Diageo, GlaxoSmithKline, and AstraZeneca are some of the largest fallers in terms of index points. The firmer pound is holding back the stocks in question as they earn a large portion of their total revenue from outside the UK. Continental indices are higher as China pledged to buy a record amount of soybeans from the US in 2020. This comes not long after the Chinese ministry of commerce confirmed it held constructive trade talks with the US earlier in the week. Lately, the two largest economies in the world have been exchanging barbs, so the markets have welcomed the more upbeat news. The mood in Europe has been lacklustre as some traders are looking ahead to the Jackson Hole Symposium which starts tomorrow. Jerome Powell, the Fed chair will be in focus as he is likely to say the central bank will do what it takes to help the economy.  

Providential Financial shares have popped after the group said it is cautiously optimistic about the rest of the year and beyond. The sub-prime lender said it has witnessed some encouraging signs of activity since June, and that it is trading in line with its guidance. The company swung to a first half statutory loss before tax of £28 million, and that is a big drop from the profit of £43.1 million posted one year ago. Its Moneybarn and Vanquis Bank operations posted profits of £2.4 million and £11.8 million respectively. The lender is in a very healthy positon in terms of liquidity, as it stands at £1.2 billion. Traders are focused the on group’s outlook and liquidity position rather than the loss. The economy is on the mend, so Provident should be in a good position to take advantage of increased demand.

In light of the bullish run in gold recently, gold miners such as Polymetal, have enjoyed bullish moves. The Russia-focused group posted solid first-half figures. Revenue and EBITDA increased by 21% and 53% respectively. The interim dividend jumped by 100% to 40 cents. In the current climate, not many companies are increasing their dividend, let alone doubling the pay-out. Last week, Polymetal’s stock hit a record high, so it’s clear a lot of good news has been baked into the price.

Go-Ahead Group shares are higher on the back of the announcement that its bus contract in Singapore has been extended by two years. It will include roughly 450 bus services.

Carnival shares are slightly higher today even though the company cancelled two cruises on account of limitations with respects to access to ports and uncertainty surrounding air travel.                 

US

Once again, the S&P 500 and the NASDAQ 100 have set new record highs. Dealers are a little bullish ahead of Mr Powell’s update tomorrow. The headline durable goods report for July showed growth of 11.2%, and that easily topped the 4.7% forecast. The report that strips out transport, showed a much more moderate growth rate as it grew by 2.4%, exceeding the 2% consensus estimate. The ex-transport June reading was revised higher to 4% from 3.6%. It is not a shock that demand is cooling, but it is encouraging to see that it is still at a fairly robust level.

Salesforece.com shares surged to an all-time high on the back of well received second quarter numbers. On a quarterly basis, revenue jumped by 30% to $5.15 billion, which was higher than expected. EPS was $1.44, and that was way better than the 67 cents that equity analysts were predicting. There was a 13% increase in core sales cloud revenue. Cloud computing has become a huge industry in recent years, and the likes of Amazon and Microsoft are also cashing-in on the surge in demand for the services. The group said it expects the third quarter EPS to be 73-74 cents, and analysts were expecting 77 cents, but traders didn’t dwell on the guidance.

Dick’s Sporting Goods shares jumped by to their highest level in over three years as the second quarter figures were strong. The pandemic prompted people to focus more on their fitness, and that was a huge benefit to the group. On a yearly basis, revenue jumped by over 20% to $2.71 billion, which was above expectations. Online sales and same stores sales grew by 194% and 9.9% respectively. EPS was $3.21 and that hammered the $1.30 consensus estimate. Now that things have sort of gone back to normal, it will probably be difficult to maintain the recent level of sales activity, but the company’s coffers received a nice boost all the same.

Tesla shares are up 4% this afternoon as it remains popular with the bulls. Jefferies upped its price target to $2,500 from $1,200 – which is a huge price upgrade. The $2,500 target is the highest a Wall Street house has attributed to the company.                

FX

GBP/USD is higher for the second day in a row but it has yet to recoup the losses it endured on Friday. Lately the currency pair has been range bound. It would appear that sideways trading has been the name of the game as dealers are awaiting some sort of news form the UK-EU trade negotiations. While it holds above the 1.3000 mark, the broader bullish move should remain intact and a break above last week’s high should pave the way for further gains.

EUR/USD is in the red as the US dollar index is firmer. Volatility in the currency pair has been low today and there hasn’t been much to go on in terms of economic announcements. The French consumer confidence report for August remained unchanged at 94, meeting forecasts. The euro hit its highest level in over two years last week, it has retreated a little since then, but it is still comfortably above the lows of the month.

Commodities

Gold is a little higher as traders are looking ahead to Jerome Powell’s speech tomorrow. The head of the Fed will be speaking at the Jackson Hole Symposium, and he is likely to reiterate the point that the US central bank is willing to do what it takes to assist the economy. The weakness is the dollar is connected to the extremely loose monetary policy of the Fed, and in turn, that has boosted the yellow metal – earlier this month it hit a record high.

Oil saw a jump in volatility on the back of the EIA report. US oil inventories fell by 4.68 million barrels, while analysts were expecting a 3.69 million barrel decline. Gasoline stockpiles fell by 4.58 million barrels, and that was also a larger than expected draw. WTI and Brent crude are not too far from the August highs – which were five month highs.   

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