Europe
It’s been a fairly uninspiring day for European markets today, notable for a number of high profile profit warnings, which have acted as a drag on UK equities, with the FTSE250 slipping back, and the FTSE100 only outperforming due to a decent performance from the basic resource sector.
BT shares have taken a hammering after the company set aside a much higher level of provisions in respect of an accounting scandal in its Italian business. While the amount of £530m is much higher than the original £145m, which is disappointing it’s not exactly the end of the world, which makes the slide in the share price seem a little bit of an overreaction.
The company also said that it had seen a slowdown in its UK business, and it is perhaps concerns about the wider business as well as corporate governance that may help explain the fact that we’ve seen over £5bn wiped off the value of the shares.
The weak pound has hit Easyjet’s profits in its first quarter despite a rise in passenger numbers from a year ago, and a rise in revenues.
The decline in the pound along with a rebound in oil prices has served to increase its costs, though the company is looking to make savings in other areas including other areas.
On the upside Anglo American (LON:AAL) has continued to build on its recent gains, helped by better numbers from its De Beers diamond business, which saw a 32% rise in rough diamond sales over the first part of its sales cycle in 2017.
Rio Tinto (LON:RIO) is also higher after announcing the sale of its Coal and Allied Industries coal business for $2.45bn, while a jump in copper prices has helped the rest of the sector.
US
US markets opened more or less near to where they closed last night, with some fairly higher profile earnings announcements taking centre stage, as the new US President continues to keep markets on the back foot.
US chemical company Du Pont announced better than expected Q4 numbers of $0.51c a share, while also stating that it fully expected to complete its merger with Dow Chemical (NYSE:DOW) by the middle of this year.
Yahoo shares are also in the spotlight after management announced that its merger with Verizon was being delayed until later this year.
Verizon’s latest numbers spoke to the extremely competitive US telecoms market, coming in shy of expectations as the company fell short of its target for wireless subscribers.
The Alibaba (NYSE:BABA) success story continues after the Chinese e-commerce company posted a 54% rise in Q3 helped by decent performances across its entire business model.
The latest US Manufacturing PMI for January showed a decent expansion of 55.1, up from 54.3 in December.
FX
After a disappointing session the US dollar has struggled to bounce back from six week lows against a basket of currencies, with the pound the biggest faller on a busy day for Brexit inspired volatility.
Having closed at a six week high against the US dollar yesterday it was perhaps inevitable that we’ve seen a little bit of sterling weakness. The rather choppy session came about after the Supreme Court upheld the High Court decision by 8-3 to compel UK Prime Minister Theresa May to hold a parliamentary vote on the triggering of Article 50.
This was expected, as was the judgement not to give the devolved parliaments of the UK an effective veto over the process. There was some concern that the judges might insist on some form of consultation, but this would have been particularly controversial which is why the prospect of it happening was fairly low.
The latest manufacturing and services flash PMI numbers from France and Germany barely registered on the performance of the euro, which has barely moved against the US dollar.
The best performer has been the Canadian dollar on reports that US President Donald Trump would approve construction of the Keystone XL and Dakota pipelines which would bring oil from Alberta in Canada to Nebraska, where it would link up with another pipeline.
Commodities
Oil prices have rebounded after yesterday’s declines as they continue to trade in the broad range we’ve been in since the beginning of the year. Talk of production cuts is all well and good but when you have countries like Libya announcing that they are pumping at three year highs, and US shale producers adding rigs at a decent rate, ultimately the only way to tell whether these OPEC cuts are having any effect is by inventory numbers. Based on this, the outlook continues to remain uncertain.
Copper prices have enjoyed a decent day as have Aluminium prices which hit a 20 month high on reports of capacity cuts in China.
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