European markets were seeing modest gains on Thursday with a rise in oil helping offset global growth concerns brought about by a slowdown in China’s service sector in April. US oil production at its lowest in eight months as well as a wildfire limiting Canadian output have buoyed prices
Decent earnings figures from BT (LON:BT), RSA (LON:RSA) and Morrisons are assisting the FTSE 100 in its attempt to break a four-day losing streak. Results from Rolls Royce (LON:RR), Centrica (LON:CNA) and Inmarsat (LON:ISA) are acting as a drag.
Confidence in the strength of the UK economy took another knock after data showed a slowdown in the service sector in April, sending sterling lower for a third day. The surprise drop to 52.3 on the UK services PMI, the lowest in three years suggests growth of just 0.1% in the second quarter.
Manufacturing has been slowing down globally but services have proven more robust, so the downturn appears UK-specific. Uncertainty over the referendum is an obvious differentiator that could explain the underperformance of the UK service sector. The bigger factor is probably the living-wage which has hit services companies disproportionally hard.
BT shares rose by over 3% after results topped expectations and the company promised to invest £6bn in faster broadband and mobile services. The broadband investment is a big upfront cost but means a breakup is less likely. The results come off the back of another competitive tailwind for BT’s mobile ambitions as the European Commission stands likely to block the merger of Hutchinson’s Three and O2.
Shares of Centrica plummeted 9% after it announced a plan to sell 350m new shares worth £770m in a rights issue.
US stocks look set for a higher open following well-received quarterly earnings and production figures from electric car-maker Tesla (NASDAQ:TSLA) ahead of unemployment claims data
Notable earnings before the US open: Merck (NYSE:MRK), Occidental Petroleum (NYSE:OXY), Kellogg (NYSE:K), Apache (NYSE:APA), MGM (NYSE:MGM)
Notable earnings after the close: Activision Blizzard (NASDAQ:ATVI), Motorola (NYSE:MSI), Medivation (NASDAQ:MDVN), News Corp (NASDAQ:NWSA)
USA pre-opening levels
S&P 500: 12 points higher at 2,063
Dow Jones: 90 points higher at 17,741
Nasdaq 100: 29 points higher at 4,341
DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.