Stock markets are on the rise this morning as traders look ahead to Jerome Powell’s update at the Jackson Hole symposium at 3pm (UK time). Dealers are taking the view the head of the US central bank will deliver a dovish update, and pave the way for a rate cut next month. Mr Powell has come under fire from President Trump who has been demanding the Fed lower rates aggressively in a bid to soften the US dollar, and boost US exports, but Jerome Powell might stress the bank’s independence and choose to convey a neutral message. After all, the unemployment rate is low, inflation is firm, and retail sales are robust, so there is a strong argument for the Fed to hold fire in September.
Entertainment One (LON:ETO) shares hit a record high this morning as Hasbro made a bid of 560p per share for the company. The move from Hasbro values the group at roughly £3.3 billion. The combined group aims to cut costs by $130 million by the year 2022, and Hasbro will take over a ‘significant portion’ of Entertainment One’s toy making, and that should boost efficiencies seeing as Hasbro specialise in that sector. In August 2016, Entertainment One knocked back a 236p offer from ITV (LON:ITV) and it was clearly the right decision seeing as Habro’s offer is significantly higher, and not to mention that ITV’s share price has suffered greatly since then.
Kingspan (LON:KSP) revealed a ‘record’ revenue and trading profit for the first-half. Revenue and trading profit jumped by 12% and 18% respectively on an annual basis, and trading margin ticked up by 60 basis points too. The figures were impressive, but the outlook was a bit cautious as the company said there were a few ‘clouds on the horizon’. There has been a slowdown in activity in Germany and the UK, and not doubt Brexit uncertainty is playing a role, but hopefully we should get some clarity on that situation in the next few months.
The US Dollar Index has recouped some of yesterday’s losses, and in turn GBP/USD and EUR/USD are in the red this morning. Traders will be looking ahead to the Mr Powell’s speech, and seeing as there is a lot of chatter about the Fed cutting rates next month, the greenback might have limited gains on the run up to the announcement from the central banker.
Foot Locker (NYSE:FL) will be in focus today as the group will announce its second-quarter figures. The stock took a knock in May on the back of the first-quarter update, as the group lowered its full-year outlook. It the same announcement, the firm revealed a share buyback scheme of $1.2 billion, and it seemed strange to announce such a scheme while also trimming the guidance. This week we have seen a string of retailer firms post good numbers, so Foot Locker can’t blame the consumer climate.
We are expecting the Dow Jones to open 78 points higher at 26,330 and we are calling the S&P 500 up 12 points at 2,934.