Equities markets are subdued as traders are counting down to the G20 summit.

Earlier in the day, Steven Mnuchin, US Treasury Secretary, said that trade talks with China were 90% complete, and that helped investors’ confidence. The crucial word is ‘were’, and it is fair to say the relationship between the US and China has deteriorated in recent weeks, so some investors might be getting ahead of themselves. 

After a shaky start to the trading session, Stagecoach shares are higher on the day after the firm posted a solid set of full-year figures. Revenues dropped by 33%, but that was largely due to a discontinuation of a number of rail franchises. On a continued basis, rail revenue was a touch higher. Pre-tax profit ticked up by 3.58% as the regional bus division was the best performer in the group. The firm kept its full-year dividend on hold, and the net debt position was reduced by 36%. It is encouraging to see that the balance sheet is strong in the face of its legal action against the Department of Transport with respect to bidding for rail franchises.

John Wood Group confirmed its performance in the first six months of the year will be better than expected. The oil services firm said that margins and earnings growth improved. Profit for the first-half is expected to be 25% higher on last year’s number.  

RPS issued a profit warning and the stock has slumped on the back of the news. The group warned that full-year figures will be ‘materially below management and market expectations’. The cooling of the Australian economy, and the Asia Pacific region was cited as one of the factors behind the lowered guidance. The group also said that the lack of political clarity in relation to Brexit has impacted the UK and Ireland consulting business.                  

US

The major US indices are higher today as traders look ahead to the G20 meeting. The durable goods report for May showed a decline of 1.3%, which undershot the -0.1% consensus estimate, and the April reading was revised from a drop of 2.1% to a decline of 2.8%. The report which strips out transport showed a 0.3% increase, and the reading that excludes defence showed a 0.6% fall, and there is speculation that poor Boeing aircraft sales weighed on the headline number.  

FedEx shares are in demand today after the firm posted respectable quarterly figures last night. Adjusted EPS was $5.01, which topped the consensus of $4.85. Revenue for the period increased by 2.89% to $17.81 billion and dealers were expecting $17.79 billion. The group cautioned the trade spat between the US and China is likely to impact its performance next year.

Micron Technology shares jumped on the open after the company announced better-than-expected figures last night. Adjusted EPS for the three month period was $1.05, which easily exceeded the 79 cents forecast. Revenue slumped by 38% to $4.79 billion, but the consensus estimate was $4.69 billion.       

FX

It has been a quiet day on the currency markets as there wasn’t much in the way for economic news from Europe. The German GfK consumer climate dropped to 9.8 – its lowest reading since March 2017. The German economy is the powerhouse of the eurozone , and it is concerning that consumers are less optimistic. EUR/USD has seen low volatility today. 

Mark Carney, the Bank of England chief, said that expectations of a no-deal Brexit has increased, and he reiterated the view that striking a deal with the EU would be preferable to a no-deal scenario. GBP/USD is largely flat on the day.

The Bitcoin boom continues as the digital currency has smashed through $12,000, and it hit a level last seen in January 2018.

Commodities

Gold is in the red as the profit taking has set in after the comments from Jerome Powell and James Bullard yesterday. Mr Bullard said that a rate cut of 0.5% would be overdone, and Mr Powell said the case for lower rates has increased, but that doesn’t mean that a cut will be delivered soon, or even at all. The slightly firmer US dollar has encouraged dealers to unwind their long positions. If the metal holds above the $1,382 mark, the wider upward move is likely to continue.

WTI and Brent crude surged after the Energy Information Administration report showed a huge drop in US inventories. Oil and gasoline inventories dropped by 12.78 million barrels and 996,000 barrels respectively. Keep in mind, the last US oil inventory report showed a decline of over 3 million barrels.

 

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