Stock markets are lower across the board in Europe as trade tensions and concerns about emerging market currencies weigh on sentiment. Asian equity markets saw a severe sell-off as there is speculation that President Trump will step up the trade spat with China by announcing more tariffs. In London, it is a broad based sell-off as financials, consumer, health care and commodity stocks are lower.
Barratt Developments (LON:BDEV) announced a 9.23% jump in full-year pre-tax profit to £835.5 million – meeting the firm’s forecast. Revenue rose by 4.8% and gross margin ticked up by 0.7%. House completions rose by 1%, and average selling price increased by 5%. The total dividend was raised by 4.7%. The performance of the business in the past year has been strong, and the outlook is positive as forward sales are up 11.1%. The company cautioned about the supply of skills, and this is something that could eat into margins in the coming years. UK house prices are cooling and this is another factor that could impact the home building sector in the years to come. The stock has been moving lower since October 2017, and if the bearish move continues it could retest 480p.
Berkeley Group (LON:BKGH) issued a positive trading statement and said the market conditions for London and the south east in the first four months of this year have remained consistent with the full-year numbers that were released in June. The group once again warned about higher transaction costs and limits on mortgage lending. The home builder reiterated its commitment to achieving £1.575 billion pre-tax profit for the two years ending April 2019. The stock hit a record high in June, but has been in decline since then, and if the recent negative move continues it could target the 3,250p region.
William Hill (LON:WMH) shares are higher this morning after the company said it will expand its US operation. The UK group will broaden its partnership with Eldoardo Resorts and will soon operate in 13 additional states in the US. European book makers have been keen to gain a piece of the US market ever since the Supreme Court legalised betting earlier this year.
Amazon (NASDAQ:AMZN) shares will be in focus today after the company’s market capitalisation surpassed $1 trillion yesterday. Apple (NASDAQ:AAPL) became the first $1 trillion company five weeks ago.
EUR/USD remains weak as the firmer greenback is putting pressure on the single currency. Germany, France and Spain all produced reports that showed their service sectors were growing at a faster rate. Economic activity in the currency bloc remains subdued and the euro is still in its wider bearish trend against the US dollar.
GBP/USD has also been hit by the stronger US dollar. The UK services PMI report in August was 54.3, up from 53.5 in July, and economists were expecting a reading of 53.9. The service sector makes up the majority of the UK’s output so this is a step in the right direction for the British economy.
At 1.30pm (UK time) the US will release the July trade figures, and the deficit is expected to widen to $50.3 billion from $46.3 billion.
We are expecting the Dow Jones to open down 107 points at 25,845 and we are calling the S&P 500 down 10 points at 2,886.
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