Stocks are firmly in the red after a mixed update from Mario Draghi, the head of the European Central Bank (ECB).

Europe

Going into the meeting the central banker was tipped to deliver a dovish update, in the form of a rate cut or at least dovish language. Rates were kept on hold, and hints were dropped about loosening monetary policy in September, but there were also calls for fiscal stimulus. The ECB chief warned about the state of the manufacturing sector, and cautioned about the risks to the economy. The fact Mr Draghi called on fiscal stimulus suggests that he is afraid that monetary tools won’t fix the region’s problems. The update wasn’t as dovish as expected, and that prompted the sell-off in stocks.                   

AstraZeneca shares hit a record high on the back of impressive second-quarter figures as earnings easily topped forecasts, and the revenue also beat estimates. The drug maker registered a 57% jump in sales in the oncology division, and group revenue is tipped to be in the low double-digits. Sales in China jumped by 44% in the three month period.

Cobham shares jumped on the news it received a 165p per share offer from Advent International, and the offer values the group at £4 billion. Cobham suffered a number of profit warnings a few years ago ,but the stock has stabilised since then ,and no doubt that is why have made their move.

Sage Group revealed a largely positive update earlier this morning, but the group said that full-year operating profit margin will be at the lower end of their guidance of between 23% and 25%. In the third-quarter, recurring revenue and organic revenue jumped by 11.4% and 5.3%. Sage predicts that full-year recurring revenue will be touch higher than their previous guidance of 8-9%.

Metro Bank revealed their first-half figures after the closing bell yesterday, and the poor numbers hammed the stock price today. Statutory profit declined by 83% to £3.4 million, but underlying profit only dropped by 43%. One-off costs relating to the accounting error contributed to the massive fall in statutory profit. The net margin rate slipped to 1.62% from 1.85% in December, and this profitability is likely to be under pressure due to the current lending environment.               

US

Stocks have been dragged lower by European sentiment. There were some solid economic indicators from the US today. The jobless claims rate slipped to 206,000, from 216,000. Durable goods sales jumped by 2% in June, which comfortably topped the 0.7% forecast. The jobs market is robust, and the workers are clearly content to spend, which begs the questions why are the Fed considering cutting rates.     

3M shares are in demand today after the company posted stronger-than-expected quarterly figures. EPS was $2.20, which exceeded the $2.05 forecast. Revenue was $8.17 billion, and the consensus estimate was $8.03 billion. The company is adjusting to the slowdown in relation to the US-China trade spat, and in April it decided to cut 2000 jobs. The group cautioned of ‘slow growth conditions’ but it also reaffirmed its full-year outlook.  

Tesla shares sold-off today after the company announced reported underwhelming figures last night. The second-quarter loss per share was $1.12, which was a big miss on the 40 cents loss that traders were expecting. Revenue slightly disappointed too as it was $6.35 billion, and the consensus estimate was $6.41. The group reaffirmed its annual production target of between 360,000 and 400,000, but keep in mind the firm delivered just over 95,000 car in the second-quarter, and it would need to build on that production level in order to reach their target.   

FX

EUR/USD saw wide trading range today, and even though, it was in the red earlier it is now up on the session as update from the ECB was as dovish as traders were expecting. ECB policy markets seems to be divided about monetary easing, and even though it is likely in September, traders didn’t get the uber dovish outlook they were expecting.

GBP/USD is flat today and the bulk of the movements were driven by the US dollar. The UK CBI realised sales report was -16, which was an improvement on the -42 reading in June, but is still disappointing.

Commodities

Gold is lower on the day as the low volatility in the metal continues. Since the metal hit a six year high on Friday it has pulled back, but while it holds above the 1,400 mark, the wider bullish trend should continue.  Next week, the Fed are tipped to cut rates, and volatility is unlikely to be low until the meeting is out of the way.    

Oil had volatile session yesterday, as it first surged in the wake of the Energy Information Administration report, which showed a plunge of 10.8 million barrels, but the market turned over on itself. Today, the energy has pushed higher throughout the session, but it hasn’t retested yesterday’s high.     

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