Europe
It’s been a slow day for markets in Europe today, with the DAX and CAC40 both edging higher on the back of a weaker euro, as well as confirmation of a decent set of German GDP numbers, while the FTSE100 has underperformed on the back of a weak basic resource sector.
Glencore (LON:GLEN) is amongst the biggest decliners despite announcing that it is on track to halve its debt and restore its dividend early next year. The company reported a net loss of $369m for the half year, while revenues fell to $69.4bn, largely as a result of the slide in commodity prices, particularly zinc, copper and oil production.
At the end of last year debt was estimated to be in the region of $30bn, largely as a result of the company’s decision in 2014 to buy Xstrata, however capital expenditure cuts and asset disposals have helped the company to steer a course whereby that is on course to come down to $17bn by the end of this year.
A slide in oil prices is also weighing on the sector after the latest API inventory data showed a build of 4.4m barrels, outweighing yesterday’s speculation that Iran might be amenable to a production freeze when OPEC members meet at the end of next month in Algiers.
On the upside, advertising giant WPP (LON:WPP) is the best performer after posting better-than-expected results for the last 6 months. Revenues increased to £6.5bn, with the weaker pound helping in terms of positive currency effects, and more positively the UK business performance was better in Q2 than Q1.
House builders are once again showing gains, continuing their slow recovery from the sharp drops seen in the wake of the Brexit vote, led by Barratt Developments (LON:BDEV) and Persimmon (LON:PSN), as sentiment around the sector starts to stabilise in the wake of recent positive trading updates.
US
US markets opened slightly lower today but continue to struggle for direction in a fairly tight range with 30-day volatility tracking at its lowest levels in years, ahead of this week’s Jackson Hole central bank symposium.
On the earnings front, stocks to keep an eye on include electronics retail giant Best Buy (NYSE:BBY) after the company posted better-than-expected Q2 earnings of $0.57c a share on revenues of $8.53bn, after the close last night.
Also on the retail front later today, home ware retailer Williams-Sonoma (NYSE:WSM) gets set to report its latest Q2 numbers, with profit expectations of $0.58c share.
Recent retail updates do appear to be showing some signs of a pickup in consumer spending, however the results are patchy with some retailers outperforming and some underperforming.
Pharmaceutical giant Pfizer (NYSE:PFE) is also in the news after acquiring sector peer AstraZeneca’s antibiotics business for $1.5bn, adding to its intention to acquire Medivation earlier this week.
Earlier this week we saw a bumper rise in new home sales for July, which raised hopes that the US housing market could well be starting to overheat a touch. This doesn’t appear to have been matched by the latest existing home sales numbers. Existing home sales declined more than expected, coming in at -3.2%
FX
The pound continues to look well supported, on course for its best run of gains since the beginning of July, despite a slightly weaker-than-expected rise in BBA mortgage approvals for July which came in at 37.66k, down from 39.76k in June.
This may well in part have been down to some Brexit anxiety, but it is also likely that it could simply be the normal seasonal summer slowdown as people focus more on their holiday plans than buying a house, while the April stamp duty changes could also have brought forward some purchases, from later in the year.
The New Zealand dollar has continued to shrug off the recent cut in interest rates to record lows as the diminishing prospect of an imminent US rate rise continues to burnish the credentials of this relative high-yielding currency.
Commodities
Commodity prices have come under pressure across the board today with gold and silver prices under pressure, along with other metals prices.
A rise in inventory in Asia warehouses along with increased supplies from Peru has kept copper prices under pressure, as prices trade near an eight-week low.
The up and down nature of oil prices continued today, as yesterday’s late Iran-inspired rebound ran into a wave of selling in the wake of last night’s 4.4m build in weekly API inventories. The weakness in prices hasn’t been helped by a comment from the Iranian oil ministry that they may not make a decision on attending next month’s Algiers event until the day before.
As far as signalling goes, that doesn’t send a particularly strong message that they are particularly concerned about underpinning the oil price at this point in time.
US weekly inventories also rose more than expected, by 2.5m barrels, confounding expectations of an 850k draw.
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