Europe
European markets have been somewhat mixed today with the FTSE100 outperforming helped in the most part by a decent performance from the oil and gas sector, a weak pound and an M&A deal.
The DAX has lagged behind after Deutsche Bank (DE:DBKGn) reported a bigger than expected loss in 2016 of €1.9bn, as CEO John Cryan attempts to steer the beleaguered lender through some very choppy waters.
In company news consumer goods giant Reckitt Benckiser announced it was in talks with US baby food maker Mead Johnson for around $16.7bn, as it looks to expand its health products business.
The rebound in oil prices doesn’t appear to have helped Royal Dutch Shell (LON:RDSa) that much in terms of preventing an 8% fall in full year profits, its worst set of numbers in years. The integration of BG Group has acted as a little bit of a drag but with cash flow fairly robust investors appear happy that the dividend isn’t the worry it was 12 months ago. Investors seem to like this pushing the shares towards the top of the FTSE100, along with a firmer oil price.
Also doing well catering firm Compass Group (LON:CPG) unexpectedly showed an increase in revenues by 2.8%, helped by an improvement in its North American business.
Earlier this week Vodafone (LON:VOD) announced that it was looking to share the load in its struggling India operation with Idea Cellular. Today’s numbers showed that increased competition is placing downward pressure on its margins, not only in India, but Europe as well. The company said it expected earnings to come in at the lower end of expectations.
AstraZeneca’s latest numbers showed a decline in revenues for the latest quarter, and while costs remain under control the company seems to be placing a lot of optimism on its latest drugs pipeline, in 2017, with a total of 12 drugs in the final stages of development. The success of all or some of these will likely dictate the longer term direction of the share price.
US
After managing to eke out some gains yesterday US markets have opened sharply lower today despite better than expected weekly jobless claims data which came in at 246k, down from 260k.
On the earnings front Facebook (NASDAQ:FB) reported a better than expected set of numbers for their latest quarter, with the headline number coming in at $1.41c a share, with revenues also beating expectations.
Ralph Lauren shares have slid sharply on the open on news that CEO Stefan Larsson will be leaving the company, after falling out with the owner.
FX
The pound has been the worst performer tumbling sharply after the Bank of England left its inflation forecasts more or less unchanged, whilst upgrading its growth forecasts for 2017 to 2%.
This was a significant surprise as it had been expected that the sharp rise in prices seen in recent months, and still to be felt, would be reflected in the latest inflation forecasts, but the report indicated that the MPC expected CPI to peak at 2.8% in the first half of next year. This seems remarkably optimistic given that the inflationary pressures being seen domestically, are also being seen in the US and Europe.
The Bank of England governor did try to inject some balance into the proceedings by stating that he can see scenarios for a rate increase and a rate cut, but this appears to be an exercise in sophistry. In the months since the referendum the Bank has been proved to be wrong in its growth forecasts for 2017, with two successive 0.6% upgrades, from 0.8% in August to 2% now and rather than admit that, they appear to be doubling down, in the hope that inflation proves transitory.
The US dollar has come under further pressure today after the US Federal Reserve left rates unchanged last night, falling to its lowest level against the euro since December 8th.
The latest antics from US President Donald Trump probably aren’t helping the US dollar either, from reportedly hanging up on the Australian Prime Minister, to threatening to deploy troops in Mexico to take care of “bad hombres”.
The best performer has been the Australian dollar after rising commodity prices helped push the trade surplus in December to a record AU$3.5bn.
Commodities
Gold prices have continued to rise on the back of continued weakness in the US dollar, and last night’s dovish interpretation of yesterday’s Fed statement.
Crude oil prices have continued to build on their recent gains, shrugging off this week’s inventory builds on reports that OPEC cut output by 840k barrels in January. Saudi Arabia also raised prices for March delivery to the US and Asia.
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