Stock markets in Europe are largely mixed today as some of the global bullish sentiment is still doing the rounds. Jerome Powell, the Fed chief, spoke in Washington DC on Wednesday and Thursday, and the take away message is the US central bank is considering cutting interest rates, and that is helping stocks around the world. Mr Powell wasn’t explicit, but a loosening of monetary policy is a very real possibility.
Commodity stocks like Anglo American (LON:AAL), Rio Tinto (LON:RIO) and BHP Billiton (LON:BHPB) are all higher even though we had disappointing trade figures from China this morning. Chinese imports dropped by 7.3%, and the consensus estimate was -4.5%, and exports fell by 1.3%, while traders were expecting a fall of 2%. The sharp decline in imports indicates weakened domestic demand, but traders shrugged that off and miners are trading higher.
Sophos confirmed that quarterly revenue increased by 7%, hardware revenue slipped by 11%, and that was offset by a 10% increase in subscription growth. Operating profit increased by 10%. Billing for next generation surged by 43%, and the group expects continued growth for the product. The stock is higher on the day.
Thomas Cook shares have slumped this morning after Fosun offered the group a £750 million rescue package. It was reported that the talks are in advanced stages, and it would give Fosun control over the group’s tour business. Peter Frankhauser, the CEO of Thomas Cook, said the offer from Fosun was ‘pragmatic’, but not the outcome we ‘wanted’, and that rocked investor confidence as it seems the firm is so desperate for cash they must be in serious trouble.
Daimler cautioned that it now expects to make a loss in the second-quarter as the group has had to make additional provisions regarding tighter regulation in the wake of the diesel manipulations scandal, and the recall of the Takata airbags was an issue too. This is the fourth profit warning from the group in this year, and the sector as whole is looking weak on account of the US-China trade spat. There is a fear that President Trump will zone in on the EU auto sector down the line, and that is hanging over the industry too.
WPP (LON:WPP) announced plans to sell 60% of its stake in Kantar to Bain Capital, and it values Kantar at $4 billion. WPP will use the proceeds to pay down debt, and it is a part of the wider restructuring plan.
EUR/USD was helped by the slip in the US dollar, and the eurozone industrial production report was respectable too. The update showed a 0.9% increase in May, which topped the 0.2% forecast.
We are expecting the Dow Jones to open 87 points higher at 27,175 and we are calling the S&P 500 up 8 points at 3,007.