Europe
The FTSE 100 has benefitted from the weakness in the pound on the back of the Bank of England’s update. The FTSE 100 is the best performing index in Europe today, as the slide in sterling gave it the edge over its continental counterparts. The announcement from the UK central bank left traders not fearing a rate hike for the time being, and that took the wind out of sterling’s sails.
The London Stock Exchange (LON:LSE) impressed investors with its first-half figures. Operating profits jumped by 19.5% and the interim dividend was raised by 14.4%. With the exception of the sell-off in early 2016, the share price has been in an upward trend since 2009 – which not many FTSE 100 stocks can boast. Today, the shares are 2.8% higher.
BMW (LON:0O0U) registered a 7.5% jump in second-quarter profits as sales of the new 5-series and motorcycles were strong. The company reinstated its full-year guidance that profits would be slightly higher than last year.
Electric car sales were up 80% in the quarter, even though it is a small section of the revenue, it is good to see the company is adapting to the change in the industry. The shares are up 0.8%.
US
The Dow Jones has reached yet another record high today as the bullish sentiment can’t be stopped. The market pushed higher as the ISM non-manufacturing report for July dipped to 53.9, from 57.4 in June. The slowdown in activity is a signal to traders the Federal Reserve are less likely to press ahead with another interest rate increase this year.
Tesla (NASDAQ:TSLA) posted a second-quarter loss per share of $2.04, while traders were only expecting a loss per share of $1.88. The company saw its loss widen from last year, when the second-quarter loss was $1.80. Revenues jumped by 78%, topping analysts’ expectations.
The company is seeing on average of 1800 net reservations per week for its latest car – the model 3. The company aims to be producing 10,000 model 3’s per week by the end of 2018, and it was this pledge that caught investors’ attention. The stock is up 6%.
FX
The GBP/USD sold-off heavily after an update from the Bank of England. The UK central bank kept its monetary policy unchanged as expected, but it also lowered its growth forecasts for the next two years. The wage growth forecast was also trimmed.
The British consumer is already being squeezed and Mark Carney, the governor of the Bank of England, basically said that is going to continue. Mr Carney also stated the ‘sole cause of above target inflation’ was the weakness in the pound. This confirms what traders already suspected: that domestic demand isn’t particularly strong.
The central bank chief announced that uncertainty over Brexit is weighing on business investment. Traders won’t be expecting a rate hike from the Bank of England for some time.
The EUR/USD is steady today after trading above $1.19 yesterday. The currency pair edged higher after the US ISM non-manufacturing numbers undershot expectations. There hasn’t been much volatility in the currency pair today, and the solid services figures from the eurozone today ensured the single currency held its ground.
The US announced that jobless claims fell by 5000 to 240,000, while the investors were expecting a reading of 243,000. Traders will keep this in mind when looking ahead to tomorrow’s non-farm payroll announcements from the US.
Commodities
Gold is fractionally higher as the ISM non-manufacturing report gave it a boost. The metal has been slipping in the past few sessions as traders take their profits from the bullish run in had in early July.
On Tuesday, the metal hit its highest level since mid-June – the when Federal Reserve raised interest rates. The upward revision to June’s ADP employment report and the larger than expected drop in US jobless claims has prepared traders for a strong non-farm payroll report tomorrow.
WTI and Brent crude are higher on the day as traders are looking ahead to the two-day OPEC meeting in Abu Dhabi next week. The major oil producers are tipped to talk about getting members to properly comply with the coordinated production cut. Traders are taking OPEC a bit more seriously this time round after they didn’t really live up to their commitments since the extension to the production cut was announced in late May.
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