market relief

Traders adopt a risk-on strategy this morning even though the standoff between the US and North Korea is still bubbling away in the background. 

The shakedown in European equity markets yesterday has encouraged bargain hunting today. European indices have been in decline for a few months now, and today’s move higher hasn’t changed the outlook.

BHP Billiton revealed a 23% jump in full-year revenue and swung to profit. The mining company announced a dividend of $0.83, and it reduced its net debt position by $10 billion. BHP Billiton reiterated is plans to sell-off the US shale operation. Today’s update is confirmation that the company’s turnaround is well underway, and the days of being dogged my weak commodity prices and high debts are a thing of the past – at least in the short to medium term. The share price gapped higher, and hit a six month high, which tells you how happy shareholders are with today’s figures.

Shares in Provident Financial plummeted this morning after the company issued its second profit warning in two months. The company now expects to post a full-year loss of between £80 million and £120 million. The interim dividend has been scrapped and there are questions over whether the final dividend will be paid out. The poor re-organisation of its debt collecting division was to blame for the profit warning. The stock price dropped to its lowest level since 2010. The subprime lender could very well struggle to get financing.

The GBP/USD and the EUR/USD are both lower on the day as we have seen a broad rally in the US dollar.

In July, UK public sector net borrowing was -£760 million, and traders were expecting it to come in at -£200 million.

The German ZEW economic sentiment survey came in at 10 in August, while economists had expected a reading of 15, down from 17.5 in July.  

We are anticipating the Dow Jones to open 57 points higher at 21,760, and we are calling the S&P 500 up 5 at 2433.

At 3pm the US will reveal the Richmond Fed manufacturing index, and economists are expecting a reading of 11, down from 14 in July.

Hewlett Packard Enterprise will announce their third-quarter results today.

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