Europe
The FTSE 100 is in the red this afternoon as a lack of positive news has encouraged some traders to take money off the table. The disappointing results from big-hitters, HSBC and BHP Billiton (LON:BHPB) has weighed on the British equity benchmark.
There are some concerns that President Trump could trigger a trade war with the EU in relation to the importation of vehicles and auto parts, so some investors are cautious.
HSBC (LON:HSBA) shares are in the red after the bank revealed figures that failed to live up to traders’ expectations. Full-year profit before tax increased by 16% to $19.9 billion, but traders were expecting $21.3 billion. Revenue for the period edged up by 5% to $53.8 billion, which undershot the consensus estimate of $54.7 billion. Like-for-like loan growth in Asia increased by 5.5% in the fourth-quarter, and that represented a big slowdown on the year. Credit losses increased too. The bank derives the vast majority of its revenue in the Far East, and the trade spat between China and the US is taking its toll on the company. HSBC is in good shape, but unfortunately their ‘pivot to Asia’ has come at a time of trade uncertainty.
Greggs confirmed they have had an ‘exceptionally strong start’ to the year as the company saw a 14% rise in sales in the first seven weeks of the year. The firm also said it now expects full-year profit to exceed the previously raised forecast. The vegan sausage roll has proved popular with customers, and more importantly, Greggs have showed their willingness and ability to adapt to the changing client tastes. A few year ago Greggs introduced healthier options, and they are continuing down that path.
InterContinental Hotels (LON:IHG) shares are in the red even though the company posted an increase in revenue and upped the dividend. Annual revenue increased by 6%, but revenue per available room ticked lower by 20 basis points to 2.5%. Restricting costs and exceptional items caused profit to decline by 26%. The group is branching out into the luxury end of the hotel market as it wants to tap into the ‘strong demand’ in the sector. The group increased its dividend by 10% and that should keep investors onside.
BHP Billiton confirmed that first-half underplaying profit fell by 8% to $4.03 billion, which undershot the $4.2 billion consensus estimate. The mega miner endured a few setbacks last year, and that prompted the company to abandon its plan to save $ 1 billion from productivity. The saving scheme has worked well in recent years, and the company has managed to lower debt as well as pay a dividend, so things are still heading in the right direction for the group.
US
The major US indices are mixed as trading gets under way after being closed yesterday on account of Presidents Day. Trade talks with China restart this week and equity traders have been hopeful, even though we haven’t really heard any overly positive news.
Walmart (NYSE:WMT) shares are in demand after the company revealed solid fourth-quarter figures. Adjusted EPS was $1.41, which easily topped the $1.33 consensus estimate. Revenue for the period was $138.79 billion, and that was in line with estimates. US same-store sales jumped by 4.2%, and dealers were anticipating growth of 3.2%. The company maintained its outlook and the dividend was increased too, so the retailer is clearly in robust health. The stock has been pushing higher since late December, and if it holds above the $92.00 region, it might target the $106.00 area.
FX
GBP/USD is higher on the back of strong UK economic data. UK average earnings excluding bonuses grew by 3.4% - meeting forecasts, and it was the highest reading in over a decade. Keep in mind that UK inflation is in decline, and the solid wage growth figures mean that workers are getting a nice boost in income. The unemployment rate held steady at 4% - in line with estimates.
EUR/USD has edged slightly higher due to the dip in the greenback. The German ZEW economic sentiment report came in at -13.4, which was better that the -14 that economists were expecting, and was a slight improvement on the -15 reading in January. The survey might be heading in the right direction, but it has been in negative territory for 11 consecutive months.
Commodities
Gold has reached a fresh 10 month high as the metal continues its bullish run. The commodity has been in an upward trend since mid-November, and should it continue it might retest the $1,350 area.
Oil has dipped as traders take their profit on the three-month high that was reached yesterday. It was reported that Saudi Arabia’s shipped volumes dropped by over 20% in the first-half of February, compared with January, which underlines their commitment to trimming output.
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