Originally published by CMC Markets
Stocks are in the red as traders lock-in profits in the wake of yesterday’s strong session.
Dealers await the meeting between President Trump and the European commission’s Jean Claude Juncker. Mr Juncker will be on the charm offensive to try and avoid hefty tariffs being imposed on EU cars that are imported into the US.
ITV (LON:ITV) was helped by the World Cup and its smash-hit TV show Love Island. The company posted an 8% rise in first-half total revenue to £1.59 billion, while the consensus estimate was £1.5 billion. Advertising revenue increased by 2%, and there was a 48% rise in online revenue growth, and that underlines the changing nature of the advertising business. The firm cautioned that third-quarter revenue could be flat due to the uncertain economic environment. ITV plans to cut costs by between £35 million and £40 million, but it also aims to pay a full-year dividend of at least 8p. The share price has been range-bound since October, but while it holds above 162p – the 200-day moving average – its outlook looks likely to remain positive.
Deutsche Bank (DE:DBKGn) announced a 14% fall in second-quarter net profit. Revenue from fixed income, currencies and commodities trading dropped by 17%, which was a greater fall than analysts were anticipating. The equities department fared better as revenue from sales and trading only dipped by 6%. The bank has been going through major restructuring, and year-to-date it has reduced the headcount by 2 100. The firm intends to cut more jobs this year. The share price has suffered in recent months, but it is off the lows of the year, and if it can remain above the €10 mark it could push higher.
Ryanair (LON:RYA) shares have edged up after the company announced plans to reduce its Dublin-based fleet from 30 to 24 later this year, and this could put 300 jobs at risk. The move is the latest development in the dispute between management and staff.
US
President Trump has lined up $12 billion worth of aid for US farmers for any unintended consequences of the trade spat with China. This suggests the US president will hold a tough line against Beijing, and is not willing to back down, even if it damages his own economy.
Earnings season rumbles on and of the major companies reporting so far today, it has been mixed. Boeing's (LON:BOEB) second-quarter earnings per share (EPS) was $3.33, beating the consensus of $3.28. Revenue for the period was $24.3 billion, while analysts were expecting $24 billion.
Fiat Chrysler (LON:0QXR) is listed in the US and in Italy, and the car manufacturer revealed disappointing results. Second-quarter EPS was €0.62 cents while traders were forecasting €0.84 cents. Revenue was €1.66 billion, while dealers were expecting €2.02 billion.
US new homes sales in June came in at 631,000 which was well below the 670,000 expected by economists. Today’s report was the weakest in four months. The May figure was revised lower to 666,000 from 689,000.
FX
EUR/USD pushed higher through the afternoon despite the mediocre German IFO business survey this morning. The update showed that the reading edged lower to 101.7, from 101.8, while the consensus estimate was 101.5. It is likely the heightened trade tensions between the US and EU are weighing on business confidence in the largest eurozone economy.
GBP/USD is higher on the session, helped along by the better-than-expected Confederation of British Industry (CBI) realised sales report. The July reading came in at 20, while the forecast was for 15. The currency pair is up for a second day in a row but while it remains below $1.3264 – the 50-day moving average – its outlook is likely to be negative.
Commodities
Gold has been helped by the softer US dollar. The metal has been losing ground since April, and the bearish move hasn’t shown any signs of stopping. The inverse relationship between the US dollar and gold has been strong lately, and that’s likely to continue. President Trump would prefer to see a weaker US dollar in order for US exports to remain competitive, but he might find it difficult to talk down the greenback.
WTI and Brent crude oil saw a spike in volatility in the wake of the Energy Information Administration (EIA) report being released. The EIA update showed that US oil stockpiles slipped by 6.14 million barrels, while gasoline stockpiles dropped by 2.32 million barrels. The initial jolt higher didn’t last long.