Equity markets are subdued as traders await the Federal Reserve meeting later this evening. The US central bank is widely expected to hike interest rates, but the statement is probably going to be the most important component of the update. There is growing chatter that the Fed will hike rates in December, and dealers will be listening out for clues about a possible rate rise at the back end of the year.
For the time being, traders are tolerating the trade spat between the US and China. Yesterday, President Trump stated the US will ‘no longer tolerate abuse’ in relation to trade. The standoff between Washington DC and Beijing has become more entrenched, and investors aren’t expecting it to be resolved anytime soon.
Boohoo (LON:BOOH) shares are in demand after the company announced solid first-half figures and raised its full-year revenue outlook. Sales for the first-six months jumped by 50% and net profit rose by 22% respectively. Boohoo is popular at home and abroad as the UK division saw a 43% rise in sales, while the international division registered a 62% jump in revenue. The international department now accounts for 41% of group sales. Boohoo raised its full-year sales guidance, and it now anticipates revenue to increase between 38% and 43%, while the previous outlook was for a 35-40% increase. The impressive growth and raised outlook has set the company apart from traditional fashion houses that have a major presence on the high street. The stock gapped higher this morning and while it holds above the 200-day moving average at 186p, its outlook could remain positive.
AA (LON:AAAA) shares have hit the skids after the company revealed a 17% drop in first-half-earnings, even though revenue rose by 2%. The Beast from the East helped contribute to a 15-year high in the number of breakdowns attended. The insurance division posted a 7% rise in motor policies. The group cut the pension deficit by £154 million, which is a step in the right direction, but the interim dividend was cut by 83% to 0.6p. The stock has been in a downward trend since March 2015, and if the bearish move continues it could target the 70p region.
EUR/USD and GBP/USD haven’t moved much today as US dollar volatility is low, and given that the Fed will release their interest rate decision and statement at 7pm (UK time) and 7.30pm (UK time) respectively, we could see narrow trading ranges between now and then.
Nike (NYSE:NKE) shares will be in focus today after the stock sold-off last night despite reporting first-quarter revenue and earnings per share that topped analysts’ estimates. The stock has been in an upward trend for nearly one year, and the pullback might see fresh buyers enter the fold.
We are expecting the Dow Jones to open up 44 points at 26,536 and we are calling the S&P 500 up 7 points at 2,922.
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