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Super-duper Thursday with the BOE and Brexit

European stocks recovered from a lower open on Thursday. Europe appears to be taking direction from Wall Street where futures are pointing higher but fell yesterday after the cancellation of some high-profile mergers and disappointing corporate results. The European banking sector is a source of weakness after poorly-received results from French bank Credit Agricole.

The FTSE 100 is lower on Thursday, sinking to a five-week low ahead of the latest Bank of England rate decision and inflation forecasts.

There’s been a mixed read-across to the shares of European carmakers after Nissan announced it is discussing a possible one-third stake in scandal-hit Mitsubishi Motors. Taking a big stake in Mitsubishi Motors is a risky move by Nissan when it’s still not known how much the fuel economy scandal will cost in fines, litigation and lost business. From a straightforward valuation standpoint, with Mitsubishi Motors shares down over 40% since the scandal broke, Nissan can negotiate a bargain price.

The addition of the Brexit debate makes this Super Thursday more like a Super-Duper Thursday. The Brexit debate adds a new element to the Bank of England’s decision on interest rates and its release of meeting minutes and updated inflation forecasts. The Brexit debate continues to rage with new controversy over TV debates on the issue.

ITV, which finds itself in the middle of a row over Brexit TV debates, saw its shares drop after a warning from Chief executive Adam Crozier that the referendum was causing uncertainty in the UK advertising market. The comments took the shine off a 14% rise in revenue in the first quarter over a year ago.

TalkTalk has compounded weakness in the telecoms sector after announcing a big slump in profit in the period following its data hack, though Chief Executive Dido Harding has said customer churn has stabilised in the last quarter.

US stocks look set for a higher open. US department stores Kohl’s as well as clothing retailers Nordstrom and Ralph Lauren are set to report results in the wake of the worst day for the S&P 500 retail sector in five years.

Stocks have barely budged in the last week but really haven’t made any progress in the last six weeks.

Rising oil prices and central banks keeping interest rates low, including the Fed which hasn’t yet raised rates this year, are a source of optimism. On the other hand lower corporate profits and a slowdown in the latest economic data from the US and China muddies the global growth outlook.

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