European markets have seen a mixed open this morning with earnings announcements dominating proceedings, ahead of today’s Fed meeting, where the Fed is widely expected to cut interest rates by 25bp.
Reports that the latest US, China trade talks have concluded without any sort of progress appear to have been largely ignored.
Banks have been in focus today after Swiss banking giant Credit Suisse (NYSE:CS) posted better than expected numbers for Q2, as profits jumped by 45%, despite a difficult economic backdrop and the low interest rate environment. Pre-tax income saw an increase to 1.3bn Swiss francs, from 1.1bn a year ago, helped by a decent performance in wealth management.
French bank BNP Paribas (LON:0HB5) has also beaten profit expectations for Q2 as it saw net profits rise 3.1% over the same period a year ago. This improvement appears to have been achieved as a result of cost cutting as revenues saw a minimal increase of 0.2% to €11.2bn. Equities trading was the main drag with a fall in revenues of 14.3%
A larger than expected provision for PPI has seen Lloyds Banking Group (LON:LLOY) miss expectations on its Q2 profits, sending the shares lower on the open, after the bank took a £550m provision, which resulted in its Q2 statutory pre-tax profits coming in at £1.3bn, below expectations of £1.76bn. There was always the prospect of another lumpy provision in the Q2 numbers with the new deadline for PPI claims fast approaching, however the extent of the provision was a little unexpected.
The picture for Q2 was always likely to be much more tricky given that the UK economy slowed quite significantly during April and May, in the wake of the extension of the Brexit deadline at the end of March. This belief has been reflected in a share price slide from the peaks in April just above 65p a share.
Despite the provision today’s numbers paint a picture of a bank plotting a pretty steady course in a difficult economic environment.
Aston Martin’s (LON:AML) latest numbers are nothing short of a disaster, as the company posted a pre-tax loss of £78.8m in the first half as the pre-IPO optimism of late last year, has become a distant memory, with investors undergoing a significant reality check. The share price has lost over 60% of its IPO valuation, and while we knew that this week’s results would be bad, the loss of confidence in the management of the business from investors has been startling.
Management have restated that they remain optimistic of the new DBX launching in Q2, while in terms of sales the numbers still look steady, across the America’s, APAC and China, which a weaker pound is expected to help. UK sales have bene disappointing with a decline of 17%. Higher costs have weighed on margins, as production capacity has been ramped up.
The UK consumer has always been seen as a key bellwether of the UK economy and its big name retailers play a part in reflecting that. This morning’s trading update from Next PLC (LON:NXT) is hugely encouraging in an environment when Brexit dominates the news flow.
Its latest numbers would appear to show that the UK consumer is as resilient as ever. Q2 full price sales saw a rise of 4%, and this has prompted the company to more than double its full year sales guidance from 1.7% to 3.6%. the company also upgraded its profit guidance to £725m, a rise of £10m, sending the share price to its highest level in over a year.
The improvement has been entirely driven by its on-line division, which has seen sales rise by 11.9%. It’s not such good news for the High Street which has seen sales fall 3.9%, and it is this area which is likely to be a continued weak spot going forward.
US markets look set to open modestly higher ahead of today's Fed meeting with Apple (NASDAQ:AAPL) shares expected to be in focus after the company’s latest numbers for Q3 came in better than forecast, as revenues came in at $53.8bn, nearly $500m better than consensus. As expected iPhone sales proved to be a bit of a weak spot, however this was offset by better sales in iPad and Macs, while services revenue continued to break records. The company also upgraded its forecasts for Q4, with an expectation of $61-$64bn in revenue.
Dow Jones is expected to open 58 points higher at 27,256
S&P500 is expected to open 4 points higher at 3,017
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