This morning has been relatively quiet on the markets with the pound little changed and the FTSE marginally lower by 7 points. With the US on a bank holiday for Thanksgiving, it’s unlikely we’ll see a big pickup in activity this afternoon as traders are given some time to ponder recent large moves.
Post US election flows persist
Despite the UK Chancellor announcing his Autumn Statement yesterday, UK assets were relatively subdued in their price movements with the majority of the action occurring elsewhere. Gold futures smashed through a major support level of $1200/oz shortly after the release of the US durable goods orders at 13:30, and whilst this reading was better than expected it is not normally considered a major market mover and the immediate reaction was something of a surprise. The price of bullion fell on Wednesday to its lowest since February and saw FTSE 100 components such as Fresnillo (LON:FRES) and Randgold Resources (LON:RRS) add to their recent declines. Today both shares are relatively unchanged but the past month has seen falls of 22% and 18% respectively, as the rising yield environment weighs on non-yielding assets.
Pets at Home drops despite revenue growth
The latest earnings release from Pets at Home has been met with skepticism by investors with the stock falling around 6% so far this morning. The pet store reported a 2.5% growth in like-for-like revenue growth with a 12% rise in statutory profits before tax in its half-year earnings report. Despite this looking like a solid earnings report on the face of it there are several warning signs. First and foremost the decline in gross margin to 53.9% is concerning and whilst there had been pre-warnings of this it still represents a worrisome development to shareholders. The other major warning sign is the retailer has told of softer sales at the start of H2, which is concerning especially as it comes against a backdrop of surprisingly strong UK retail sales figures. This area must be watched carefully as we head into the vital Christmas sales period for the pets store.