Europe
While it’s been a busy day for company results and trading updates, for European benchmarks it’s been a day of treading water with the German DAX unable to hold onto gains above the 12,000 level.
The FTSE100 has been similarly lacklustre trading either side of the 7,300 level, with the UK weather getting more headlines than activity in the markets, though we’ve seen a bit of a rebound in the CAC40, on the back of a slightly better day for French bond markets.
It’s been a mixed day for banking stocks with Barclays (LON:BARC) having a rollercoaster session. Following on from yesterday’s results from Lloyds Banking Group (LON:LLOY), it was Barclays turn to announce a significant increase in profits for the year.
A tripling of profits to £3.2bn was driven primarily by an improvement in investment banking revenues, as the increased volatility in the second half of 2016 helped boost revenues, particularly in Q4, which initially saw the shares rise in early trade, however the shares slid back as concerns over an unresolved litigation headwind from the US Department of Justice tempered investor enthusiasm, and pulled shares down from 15 month highs. (See previous note)
The government has also availed itself of the opportunity to divest more of its shareholding in Lloyds Banking Group, after yesterday’s better than expected results, cutting its stake to 3.89%.
Shopping centre owner Intu Properties is also near the top of the FTSE after reporting a decent increase in turnover for rentals. The owner of Lakeside in Thurrock and the Trafford Centre in Manchester did see a decline in profits, but that was primarily as a result of property revaluations.
RSA is also on the up after announcing a 25% rise in profits while announcing a final dividend of 11p, bringing the total dividend to 16p, a rise of over 50%.
A bigger than expected decline in net debt has seen Glencore’s share price take another leg higher today. Just over a year ago Glencore’s debt load was around $30bn, with the share price trading at levels around 70p. Debt levels are now almost half of that level and the share price is trading well north of 330p.
On the downside Centrica’s shares have taken a nose dive after preliminary full year revenues showed a decline to £27.1bn. Other than that the numbers were fairly positive with a reduction in debt levels and an improvement on operating profits and revenues.
Amongst the other decliners we’ve seen Easyjet, Rio Tinto (LON:RIO), Glaxo and HSBC all down as a result of going ex-dividend.
US
After a mixed finish yesterday in the wake of last night’s FOMC minutes US markets opened, in what is becoming a familiar habit, at new all-time highs after new US Treasury Secretary Steve Mnuchin announced that there could well be significant tax reform in place by the end of the summer, and the Congressional August recess.
On the company front Tesla Motors reported a bigger than expected loss of $0.69c a share, despite revenues beating expectations.
Computer hardware manufacturer HP was helped by a rebound in the PC business as rising sales saw its profits come in ahead of expectations at $0.38c a share.
US consumers appear to still like going to the Cheesecake Factory as it reported revenues that beat forecasts and profits of $0.67c a share.
FX
The US dollar has slid back after last night’s FOMC minutes proved to be every bit as unenlightening as most had expected them to be, with odds of a hike in May overtaking the prospects of a move in March, particularly since the phrase “fairly soon” appears to be being interpreted as not in March.
The pound has continued to gain ground after CBI retail sales showed an improvement on the January numbers, coming in at 9 for February after showing a sharp decline to -8.
Commodities
Oil prices have headed back up after the latest US inventory showed its first weekly fall this year, by around 884k, which in the wider scheme of things is a gnat bite when set against the multimillion builds seen in the last three weeks. Such is the irrational exuberance of speculative money chasing oil prices higher though any shortfall is likely to be seized on as evidence that the long awaited rebalancing is starting to play out. Brent prices still remain below their peaks seen at the start of the year, as do WTI prices.
Gold prices have continued to edge higher on the back of today’s weaker US dollar, hitting their highest levels since November last year, just shy of $1,250 an ounce.
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