- Europe snaps winning streak
- House builders lead FTSE
- Next profits jump, Morrison Supermarkets (LONDON:MRW)
- US markets roll over
- Apple shares (NASDAQ:AAPL) bounce back despite $99 pencil
UK & Europe
European stocks snapped a three-day winning streak on Thursday. The drop comes one week before the Federal Reserve decides whether to hike interest rates. Until the decision’s made, markets are likely to remain on edge.
House builders topped the FTSE 100 with Barratt Developments (LONDON:BDEV) leading the field with gains of over 2% after a report forecasting the supply/demand misbalance of housing in the UK is set to send house prices higher still. The report is really just projecting current conditions like strong consumer confidence and low interest rates into the future.
Corporate results from Britain’s high street were a bit of a mixed bag.
Next (LONDON:NXT) was a top riser after beating earnings expectations and taking a more muted stance that Whitbread (LONDON:WTB) on the minimum wage, saying it was manageable. Dixons Carphone (LONDON:DC) shares jumped after sales rose but a fall in sales at Argos hurt Home Retail Group results sending shares lower.
Morrisons was a top faller after the company reported a massive 47% drop in profits for the first half, a day after reporting the sale of 140 M Local convenience stores. Traditionally targeting the smaller budget consumer, Morrisons has been hard hit by customers switching to discounters Aldi and Lidl.
US
A build-up of concern ahead of next week’s Fed rate meeting turned a higher open on Wall Street lower within the first hour of trading but a strong lead from Apple took markets back into the green.
Apple shares regained Wednesday’s losses. Markets must be drawn to the Apple Pencil and the new 12 inch iPad that it’s compatible with.
The drop seen immediately after the release of new Apple products is actually quite normal. Apple shares do tend to suffer form a bit of good old “buy the rumour sell the fact when new products are launched.” High expectations will often push shares higher before the release and even if the products are good, shares will drop afterwards once the expectations have been met.
FX
The Dollar was unchanged versus most major currencies on Thursday barring a large drop in the New Zealand dollar.
The New Zealand dollar dived by as much as 2% on Thursday after the Reserve Bank of New Zealand cut interest rates and signalled it was willing to do more. The policy of the New Zealand central bank is in stark contrast with the US Federal Reserve which could raise rates next week. NZD/USD reached a six year low on August 24 and looks set to drop even lower.
The British pound gained after the expected 8-1 vote for no change to interest rates from the Bank of England when minutes revealed the bank did not see recent global developments affecting its outlook. The pound later gave back some of its gains since there still appears to be no hike on the horizon in the near future.
The Japanese yen fell for a fourth day versus the dollar after an adviser to Prime minister Abe said the October meeting of the Bank of Japan could be a good time for further easing.
Commodities
Crude oil prices rebounded slightly after Wednesday’s sell-off before the release of crude inventories expected to show a build of 0.9m barrels.
Gold rebounded after the sharp sell-off on Wednesday following the news of India’s new gold monetisation plan that could curb the country’s demand for the yellow metal.
Copper prices rebounded after reported Chinese government intervention in FX markets saw the offshore yuan jump by 1%, easing concerns that a depreciating yuan would put further upwards pressure on the dollar.
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