market relief

The FTSE 100 is set to finish higher on the day, and it has been a broad-based rally throughout the session. 

Europe

The energy sector was given a lift by strong results from BP, and the prospect of a trade war between the US and China has diminished, and that has boosted the mining sector.  

BP shares are higher after the company announced a respectable set of quarterly figures. Underlying replacement cost was $2.8 billion, and equity analysts were anticipating $2.7 billion. The oil giant increased its dividend by 2.5% – its first increase in four years. BP shareholders had a reason to be happy as a $6 billion share buyback scheme was announced. The group reduced its net debt position too, and that is another step in the right direction. The stock has been pushing higher since March, and if it holds above the 550p region, the bullish move could continue.

Just Eat shares are lower today after it lifted its revenue forecast, while keeping its profit outlook unchanged. The firm previously predicted revenue of between £660 million and £700 million, and is now aiming for revenue of between £740 million and £770 million. Just Eat is also beefing up its capital expenditure, and plans to spend between £55 million and £60 million – the old guidance was £50 million. The group is in a tough market as it is in competition with UberEats and Deliveroo. The company confirmed that revenue for the first-half rose by 45.3%. The share price has been in an upward trend since April, and if the largely bullish move continues it could target 900p.

Dixons Carphone revealed that as many as 10 million customers had their records hacked, and that is a far greater number of clients than initially thought. The security breach took place in 2017, and it is worth remembering that the company had another security breach in June. The company revealed that no financial details, such as bank accounts or payment card details were compromised. The company’s image has taken a knock on account of this however, and it may find it hard to bounce back.

US

Equity markets are in positive territory as trade tensions between the US and China are improving. It was reported that the two countries are keen to restart discussions, and that there are some ‘quiet conversations’ in relation to China. Traders took this as a positive sign and were encouraged to snap up stocks on the back of it.

Procter and Gamble shares are in the red after the company missed on revenue forecasts, but topped the earning prediction. Revenue for the quarter was $16.50 billion, while equity analysts were anticipating $16.54. Earnings per share was 94 cents, and the consensus estimate was 90 cents.

The core PCE report for June was 1.9%, while economists were expecting 2%, and the May report was revised down to 1.9%, from 2%. The report is the Federal Reserve’s preferred measure of inflation, and it suggests that demand is softening a little.    

FX

EUR/USD is a touch higher on the session despite mixed economic indicators from the eurozone. The July inflation report ticked up to 2.1%, from 2%, while economists were expecting it to remain at 2%. The second-quarter GDP report slipped to 2.1% from 2.5%, and it undershot the consensus estimate of 2.2%. The reports paint a mixed picture of the currency bloc, as growth is cooling, but the cost of living is rising. It is possible that higher oil prices are the driving factor behind the increase in CPI.

USD/CAD edged lower in light of the US core PCE report and the Canadian GDP update. The softer-than-expected PCE update from the US, and the firmer-than-expected growth figures from Canada, put pressure on the currency pair. In May, the Canadian economy grew by 0.5%, while traders were expecting a reading of 0.4%.    

Commodities

Gold has edged up slightly today, but the metal remains in the downward trend that it has been in since April. The Federal Reserve meeting tomorrow will be closely watched by traders, as the inverse relationship between the US dollar and gold has been strong recently. There is speculation the US central bank will hike interest rates in September and December, and if the Fed sticks to two more rate hikes in 2018, we could see pressure remain on gold.

WTI and Brent crude oil are lower after a survey showed that Opec output hit a 2018 high in July. The announcement that supply from the oil cartel increased, prompted traders to take money off the table. Recently, traders have been fearful about future supply given the impending sanctions on Iran, but they are happy to dump oil in light of the Opecnews.      

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