The FTSE 100 has been lifted by the sell-off in the pound. Concern over a no-deal Brexit has weighed on sterling, and in turn the FTSE has been given a lift. The bullish sentiment that was doing the rounds yesterday has continued today. It seems that a lack of negative news has prompted traders to buy into the market.
Ryanair shares are a little higher this afternoon after the group said it would close some of its bases and cut certain flights due to the delay in the delivery of Boeing 737 Max planes. The airline said that summer traffic for 2020 will be below expectations on account of aircraft delays.
Burberry shares soared to an 11-month high today after the company posted strong first-quarter results. The fashion house revealed a 4% jump in same-store sales, which exceeded analysts' estimates of roughly 2%. The firm performed well in the Far East, as Asia Pacific saw a single-digit increase in revenue, while mainland China registered mid-teens percentage sales growth. The company is more than halfway through its restructuring scheme, and confirmed its full-year outlook for 2020. Adding to the bullish move on the back of the numbers, JPMorgan Chase increased its price target to 2,000p from 1,850p.
AG Barr shares sold-off on the back of a profit warning, and the drinks company now predicts that profit will drop on the year, and the fall might be as much as 20%. The group experienced ‘challenges’ with brands like Rubicon and Rockstar, and it described the weather in spring and early summer as ‘disappointing’. In order to regain momentum, AG Barr said there will be some exceptional costs incurred.
The major indices are mixed as reporting season moves up a notch. The retail sales report was solid as it showed a 0.4% rise in June, and it highlights consumers’ willingness to spend.
Domino’s Pizza shares have tumbled as second-quarter firm-owned US same-store sales grew by 2.1%, while the consensus estimate was 3.15%. Same-store sales of franchise stores increased by 3.1%, and that undershot the 4.69% forecast. Total revenue increased by 4.1% to $811.6 million, but traders were expecting $836.6 million. The rise of UberEats and other food delivery apps have eaten into Domino’s slice of the market.
US banks reveal results
Reporting season for major US banks got underway today when we heard from Goldman Sachs, JPMorgan Chase and Wells Fargo. Goldman’s revealed second-quarter EPS of $5.81, which topped the $4.89 consensus estimate. Revenue slipped by 2% to $9.46 billion, and traders were expecting $8.83 billion. The quarterly dividend was upped to $1.25 from 85 cents.
JPMorgan Chase revealed quarterly EPS of $2.82, topped the $2.50 forecast. Revenue increased by 4% on annual basis to $29.57 billion, which topped the $28.9 billion forecast. The group trimmed the forecast of its net interest income, and that took the shine off the other numbers.
GBP/USD dropped to its lowest level since April 2017 over concerns about Brext. Both Boris Johnson and Jeremey Hunt have called for the removal of the Irish backstop from the withdrawal agreement, and seeing as the EU said the withdrawal agreement won’t be renegotiated, the fears of a no-deal Brexit have risen. It was reported that Boris Johnson might seek to suspend parliament in late October, should he become Prime Minister, in a bid to stop a no deal Brexit being blocked at Westminster, and that weighed on the pound.
EUR/USD has been hurt by the rally in the greenback, but the poor German ZEW reported added to the euro’s woes. The ZEW economic sentiment fell to -24.5, from -21.1 in June, and economists were expecting -22.3, The reading was the lowest since late 2018, and it adds to the negative sentiment that hangs over the currency bloc.
Gold is in the red as the US dollar is higher on the session. The metal continues to experience low volatility is trading sideways. Gold has enjoyed an impressive rally since April, and while it holds above the $1,382 mark, the bullish trend is likely to continue.
Oil is slightly higher today as the feelgood factor from yesterday’s economic reports from China is still doing the rounds. Tensions are rising in relation to Iran, and dealers are fearful they could escalate even further.
Disclaimer: 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.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.