European equity markets are broadly higher this morning as traders look ahead to the European Central Bank (ECB) meeting at 12.45 pm (UK time), and the press conference that follows at 13:30pm (UK time).
Traders are dividend whether the ECB will cut the deposit rate or not, but some sort of dovish update is expected. The central bank for the eurozone are mindful the Federal Reserve is likely to cut rates next week, and they might want to get their rate cut in first. On the other hand, the ECB might sit back and wait for the Federal Reserve to act, and shape their policy around the Fed’s decision.
Cobham (LON:COB) shares have surged after it was announced that the group will be taken over by Advent International for £4 billion. Cobham’s share price has been rocked in recent years due to profit warnings, and the 165p per share bid from Advent represents a 35% premium on yesterday’s close.
Sage Group (LON:SGE) shares have sold-off after the group cautioned that full-year organic operating profit margin to be at the lower end of the guidance range of between 23-25%. In the third-quarter, organic total revenue jumped by 5.3%, and recurring revenue increased by 11.4%. The company predicts that full-year recurring revenue growth will slightly exceed the guidance of 8-9%. It’s not ideal that profit margins are tipped to be at the bottom end of forecasts, but they are still expected to be a healthy level. The stock hit an all-time high at the beginning of the month, so sentiment was clearly bullish going into the day’s numbers, and it seems like today’s move is a bout of profit taking. Despite the negative move today, the wider bullish trend is still intact, and while it holds above the 700p mark, the wider upward trend is likely to continue.
Metro Bank (LON:MTRO) shares have slumped to an all-time low after the group revealed disappointing first-half figures. Statutory profit collapsed by 83% to £3.4 million. The bank incurred a large amount of one-off costs relating to the accounting error, and when you remove exceptional items, underlying profit only fell by 43%. The loan book increased by 25% on an annual basis, but the net interest margin dropped from 1.62% to 1.85%. Profit from lending is likely to remain under pressure as the political uncertainty in relation to Brexit is weighing on bond yields. The bank’s capital ratio improved from 13.1% in December to 15.8%, and it is clear the capital raisings are helping the balance sheet, and that should lift client and investor confidence.
EUR/USD is in the red as the German Ifo business climate reading slipped to 95.7 in July, while economists were expecting 97.1. On an adjusted basis, today’s reading was the weakest since 2013. Traders are mindful of the ECB meeting, and at the very least, traders are expecting dovish language.
Tesla (NASDAQ:TSLA) shares will be in focus today after the group revealed poor second-quarter figures last night. The loss per share was $1.12, which was far worse than the 40 cents loss that traders were expecting. Revenue for the period came in at $6.35 billion, while the consensus estimate was $6.41 billion. Tesla delivered over 158,000 cars in the first six months, and last night the group reiterated it expects to achieve its target of between and 360,000 and 400,000.
We are expecting the Dow Jones to open 21 points higher at 27,290 and we are calling the S&P 500 up 2 points at 3,021.
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