The FTSE and the majority of the European bourses started the day higher but the mood remains still relatively cautious as traders weigh strong company earnings against the expected flare up in global trade frictions. In London, good earnings from paper group Mondi (LON:MNDI) and the Royal Bank of Scotland (LON:RBS) helped tip the scales upwards, more than outweighing the decline in International Consolidated Airlines (LON:ICAG) shares after the company reported a first half loss caused by French air strikes.
Pound continues to slide after BoE rate decision
The pound continued to lose ground against the dollar and the euro a day after the Bank of England hiked rates to 0.75% as comments from BoE governor Mark Carney poured cold water on an initial sterling rally. The UK currency is now trading lower than it did before the BoE meeting, down 0.16% against the euro and 0.26% lower against the dollar. Carney’s comments made clear that the markets shouldn’t expect a further rate rise in November not only because of the state of the economy but also because the risk of Britain failing to reach a deal on its position during Brexit remains uncomfortably high.
RBS pays out first dividend in 10 years
The UK bank which was bailed out by the state 10 years ago has decided to pay out its first dividend in ten years after it reported a first half operating profit of £1.83. Although the bank’s profit is somewhat lower than in the previous year RBS is in a better position to make decisions on dividends because it reached a resolution in its long standing legal battle with the US over its role in selling mortgage-backed securities ahead of the financial crisis in 2008. The bank had to agree to a hefty fine of over £800 million but this has now been deducted from the profit in this reporting period allowing RBS to continue with a clean slate.
Cobham (LON:COB) has rare good news for investor
Cobham(LON:COB) has snapped its downgrade streak with some rare good news for investors.
The company has by no means but its woes behind it, but the improvement in operating margins demonstrates how much potential is left in the business.
Governments around the world, led by the US, are upping spending on their military capabilities, especially with regards to technology. The supportive trading environment could well help Cobham get back on its feet, provided new management takes a more careful approach to its investment decision-making.
The KC-tanker remains a big grey cloud hanging over the company and it will be a great relief if it's delivered to the US military by the end of the year as hoped. By then, management should have a clearer idea of when dividend payments could be back on the table -- though it'd be unrealistic for investors to expect much joy on that front any time soon.
William Hill has regulatory pain in the UK but regulatory relief in the US.
William Hill (LON:WMH) hasn't left anyone in any doubt about how much changes to UK betting rules will hurt the company.
The giant write-down it's announced today was equivalent to around a third of its entire market capitalisation and shows just how much of a cash cow those fixed-odd betting terminals have been for the business.
The impairment charge is a non-cash interpretation of how much the regulatory change will affect the underlying value of William Hill's assets. The impact on its actual revenues won't start playing out until 2020, when the £2 cap on bet sizes kicks in.
Fortunately for William Hill, regulatory pain in the UK has coincided with regulatory relief in the US. So far, it looks like the company is making good inroads across the Atlantic, with strong early revenue gains in New Jersey boding well for new expansions into Mississippi and West Virginia.
Results in the core retail business were far from ideal, with World Cup wagering meeting expectations, but gross win margins falling compared to Brazil 2014.
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