Stocks in Europe have recovered a little from yesterday’s declines after the dust has settled from the poor manufacturing figures from Germany. Questions still hang over the health of the eurozone economy, and seeing as stocks haven’t rebounded that much today, it seems as if traders are still a little cautious. US-China trade talks will resume in two weeks according to US treasury secretary, Steven Mnuchin, so traders are awaiting the next round of negotiations.
The trade situation between the US and China has calmed down compared with late August, but a certain level unease remains, which is why the FTSE 100 plus the DAX remain below the July highs.
Metro Bank (LON:MTRO) shares slumped to a record-low on the back of yesterday’s announcement that it scrapped plans to carry out a critical bond issue. The announcement came after the market close, so the stock is paying the price for the revelation today. The struggling finance house scrapped plans to raise to £250 million via a bond issue that would yield 7.5%, but the idea was shelved due to market conditions. It’s a sad state of affairs when a company can’t attract investors with a yield like that, which is why traders are spooked this morning. Cash is king, so if a bank can’t raise capital to meet regulatory requirements, confidence in the bank is likely to remain low.
A.G.Barr (LON:BAG) shares are higher this morning despite an underwhelming first-year update. Pre-tax profit dropped by 23% to £13.9 million, while revenue dropped by 10%. The same time frame last year was assisted by warm weather so it’s partially why today’s numbers aren’t amazing. The drinks company said the first-half was ‘disappointing;’ but it was expecting a year of ‘pricing transition’, so it seems like some of the bad news was already factored into the price. On the bright side, the interim dividend was lifted by 2.6%, plus the full-year outlook was maintained.
Card Factory PLC (LON:CARDC) had a ‘satisfactory sales performance’ in the first six months of the year as revenue increased by 5.5%, in addition to a 1.5% rise in like-for-like sales, which was a big improvement on the 0.2% decline last year. Despite the respectable revenue, pre-tax profit dropped by 14.4%, as higher wages as wells as Brexit-related stockpiling were blamed for the fall in earnings.
EUR/USD is broadly unchanged in the wake of the mixed German Ifo reports. The business climate reading was 94.6, which was a slight improvement on the August reading of 94.3, but the expectations reading dropped from 91.3 to 90.8 – a ten year low. The expectations update is likely to be a warning for next month’s business climate report.
UK public sector net borrowing last month was £5.7 billion, which undershot the forecasts of £6.6 billion, and GBP/USD is largely flat on the day.
Nike (NYSE:NKE) will be in focus today as the company will release its first-quarter numbers. The company is tipped to reveal EPS for the three month period of 70 cents, and keep in mind the EPS in the last quarter was 62 cents. The share price of the fashion house has held up relatively well considering the US-China trade spat, which hasn’t had a major impact on the company so far, but the firm’s guidance will be of interest to traders.
We are expecting the Dow Jones to open 111 points higher at 27,060 and we are calling the S&P 500 up 14 points at 3,005.
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