Sentiment in Europe is sour as uncertainty surrounding Brexit continues. Dominic Raab, the Brexit secretary has resigned, and this has rocked confidence in Prime Minister May. The major decline in sterling is cushioning the move in the FTSE 100 – which is slightly higher. British banks and homebuilders are under pressure as traders are fearful about the UK’s political future.
Tullow Oil (LON:TLW) shares are in demand this morning after the company now expects net debt to drop to $2.8 billion, and the group expects full-year free cash flow to be $700 million. The oil company has reduced its capital investment budget to $430 million, down from $460 million, and that has assisted with the cash flow prediction. The group also narrowed the production guidance to between 89,300 and 93,300 barrels of oil equivalent per day (boepd), and the oil forecast was between 89,000 and 95,000 boepd. Given the recent slump in the oil market it is prudent that Tullow is curtailing its investment plans.
Royal Mail (LON:RMG) confirmed that first-half pre-tax profits declined by 57%, while underlying revenue ticked up by 1%. Poor productivity and a failure to implement cost saving plans caused the drop in profits. The company’s international unit, GLS, saw costs tick up, and fewer letters were sent at home, and this added to the disappointing figures too. The market reaction was muted today, as the firm issued a profit warnings last month – which sparked a severe sell-off.
Aston Martin shares have had a volatile session this morning. The luxury car manufacturer posted a 48% jump in third-quarter adjusted earnings, and revenue increased by 81%. Car production doubled in the period, and the company now expects full-year production to be at the top end of estimates. Aston Martin is in the process of opening a new plant in Wales, and this will boost production capacity. The stock opened higher, but quickly turned lower, despite the results being impressive.
Walmart (NYSE:WMT) shares will be in focus today as the company will announce its third-quarter results. The retailer posted an impressive set of second-quarter figures in August, where earnings, revenue and same-store-sales all topped forecasts. The stock hit a seven month-high on Monday, but has pulled back a little since then.
GBP/USD has slumped this morning after Theresa May suffered a major blow, Dominic Raab, the Brexit secretary, resigned. The move has rocked confidence in the Prime Minister’s ability to get the withdrawal agreement approved. Adding to that, UK retail sales in October dropped by 0.5%, which undershot the forecast of 0.2% growth.
We are expecting the Dow Jones to open 40 points lower at 25,040 and we are calling the S&P 500 down 6 points at 2,695.
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