- European shares seen opening slightly higher
- Interest rates and details of asset purchases by the ECB remain unchanged after yesterdays meeting.
- No mention of protectionist policy or further details on the supposed resolution of aluminium and steel tariffs were given by Draghi.
- Prescription cannabis for medical use is now legal in the UK after a reclassification of the drug.
- Amazon smash forecasts of $2.54 EPS with a healthy $5.07 for their end of years.
- Sky broadcaster and broadband provider profits are soaring amidst the Comcast and 21st Century Fox bidding war.
- Copper is looking to gain this week for the first time in seven.
- After three days worth of gains oil slipped on a quieter trading day, however the black gold remains supported by Saudi transport disruption.
Asian overnight: A somewhat steady, if indecisive session overnight saw moderate gains across the Japanese and Australian indices, while Chinese and Hong Kong markets drifted lower throughout the session. Asian markets are trading marginally lower this morning although the Australian All Ordinaries is up nearly 1%. Yesterday’s Facebook driven losses on the Nasdaq had a limited impact on tech shares in Asia, with Hong Kong the only market to see downside for their tech sector. On the data front, Japanese Tokyo core CPI rose to 0.8% (from 0.7%), in a welcome continuation of the rare rise seen last month.
UK, US and Europe: US Index Futures are staging a partial rebound this morning after yesterday's Nasdaq led decline following worse than expected results from Facebook. The dollar has softened overnight and in turn we have seen some marginal gains in commodity prices. Looking ahead, a quiet day from Europe means the focus will be firmly fixed on the US GDP figure, which is expected to rise sharply to over 4%. Trump’s excitement at the ‘best financial numbers on the planet’ could possibly be another lead on the potential release, given his announcement about “looking forward to the jobs numbers” on the day of a massive NFP outperformance back in June.
The corporate calendar remains busy, with Twitter earnings maintaining the focus on tech stocks today. Meanwhile, we also have the likes of Exxon Mobil, Chevron, Colgate, Merck, and American Airlines numbers to look out for.
South Africa: The rand is slightly firmer against the majors. BHP Billiton is up 2.2% in Australia, suggestive of a positive start for local diversified miners. Tencent Holdings is down 0.75% in Asia, suggestive of a similar start for major holding company Naspers. Markets are expected to trade cautiously into this afternoons US GDP data release where consensus estimates predict an economic expansion of more than 4% q/q in the worlds largest economy.
Economic calendar - key events and forecast (times in BST)
1.30pm – US GDP (Q2, first reading): growth forecast to be 2.1% QoQ. Markets to watch: US indices, USD crosses
3pm – US Michigan confidence index (July, final): forecast to fall to 97.1 from 98.2. Markets to watch: US indices, USD crosses
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
- Reckitt Benckiser saw an outperformance in its infant formula business, with a 7% rise in sales for that segment helping drive a 4% increase in like-for-like sales for the business as a whole over the second quarter. It was that bullish development in their infant formula business, particularly in China, which helped raise their full-year sales outlook.
- Pearson are on track to return the business to profitability this year, after a rise in demand in US and online helped deliver an outperformance for what is traditionally a quiet first half of the year. The second half of the year is usually where the company makes the bulk of its profits, and with first-half adjusted operating profit of £107m, this was well ahead of the £85m expected.
- BT Group saw a 1% rise in core earnings for the first quarter, thanks largely to cost savings, and strong business in its EE mobile unit. However, the firm also saw underlying revenue down 2%, which fell in line with market expectations.
- Rightmove saw pre-tax profit rise 12% in the six months to June, with revenue up 10% as their revenue per advertiser rose to £987, from £911. The number of agents using the platform remained largely flat despite housing market struggles, helping enable a 14% rise in their interim dividend, to 25p a share.
- Oando Plc Interim results showed turnover increased by 11%, N297.3 billion compared to N267.0 billion (H1 2017). Gross Profit increased by 53%, N51.0 billion compared to N33.4 billion (H1 2017).
- Royal Bafokeng Platinum anticipates a loss per share ("LPS") for the six months ended 30 June 2018, of between 13.5 cents and 10.5 cents (representing an improvement of between 10% and 30%), compared to a LPS of 15 cents for the previous corresponding period (the six months ended (30 June 2017). A headline loss per share (“HLPS”) of between 7.5 cents and 4.5 cents (representing an improvement of between 51% and 70.6%) is anticipated, compared to a HLPS of 15.3 cents for the previous corresponding period.
William Hill Upgraded to Hold at Peel Hunt
Tekmar Group Rated New Buy at Berenberg
NCC Upgraded to Buy at Berenberg
Rosneft GDRs Upgraded to Buy at Goldman
Amerisur Resources Cut to Sector Perform at RBC
Inchcape Downgraded to Hold at HSBC
SSE Downgraded to Hold at HSBC
Ebro Foods Downgraded to Neutral at Haitong