Stock markets in Europe are largely showing modest losses as the US-China trade story ticks along. The updates from both sides yesterday seemed to show that progress has been made. Today, a phone call took place between China’s vice premier, Liu He, and Robert Lighthizer, US trade advisor, as well as Steven Mnuchin, US treasury secretary. It was reported the conversation entailed ‘resolving core issues’. It would appear the talks are at the finer details stage, which is a good sign, but nothing can be taken for granted.
Pets at Home Group PLC(LON:PETSP) (LON:PETSP) shares are in demand this morning after the group announced that it expects full-year profit to be at the top end of market expectations. The group also said it is on track to deliver full-year profit-growth ahead of plan. On a like-for-like basis, first-half revenue increased by 7.6%.
Last year the group took the strategic decision to focus more on its veterinary practice – which has a higher profit margin, and it appears the move has paid off. The rise of e-commerce means that consumers can buy cheap food and accessories for pets online, so the group should focus on its veterinary division.
De La Rue PLC(LON:DLAR) (LON:DLAR) shares have plunged after the group swung to a first-half loss, plus, it scrapped its dividend. The company registered a loss of £9.2 million, which compared with a profit of over £10 million in the same period last year. Management will be conducting a review of the entire business, and in light of the fact the dividend was shelved, it suggests the group is facing serious problems. To make matters worse, net debt jumped by 58% to £170.7 million. The financial health of the group is poor, so Clive Vacher, the turnaround specialist who was drafted in last month as CEO has a tough task ahead of him.
Compass Group PLC(LON:CPG) (LON:CPG) cautioned that trading in Europe was soft, which overshadowed the largely positive full-year numbers. Statutory revenue edged up to £22.88 billion, while operating profit slipped to £1.6 billion. For next year, organic growth is tipped to be in the middle of the 4-6% guidance. The dividend edged up by 6.1%, so the company is largely confident of future performance, but it is taking action in relation to its cost base on account of the conditions in Europe.
GBP/USD is lower on the back of an opinion poll which showed that support for the Conservative party cooled a little, while support for Labour edged up. The poll by Kantar sill puts the Tories ahead by 11 points, which is why the pound hasn’t dropped that much. Volatility in the pound is likely to remain low unless there is a surge in support for Labour in the polls.
Dick’s Sporting Goods Inc (NYSE:DKS) will release their third-quarter results before the open of the US market. The group is adapting to changing consumer habits as online sales now accounts for 12% of total sales. In the second-quarter, online sales jumped by 21%, and traders will be wondering if that trend will continue.
We are expecting the Dow Jones to open 16 points lower at 28,050 and we are calling the S&P 500 down 2 points at 3,131.
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