Stock markets are showing small gains as the trading session draws to a close.
Europe
The bullish mood in the US has lifted sentiment on this side of the Atlantic. Steven Mnuchin, the US Treasury Secretary, said he will give one more go at trying to come to an agreement with the Democrats with respect to a coronavirus relief package, and that is assisting equities. Lately, the moves in the US have had an influence on European sentiment, and that is what we are seeing today.
888 shares hit their highest level in over two years on the back of the news that it would pay out 6 cents in dividends. The interim dividend will be 3.2 cents, and an extra pay-out of 2.8 cents will be made too. 888 cut its dividend on account of the heath crisis, so in light of today’s news, the stock surged. Income seeking investors are more likely to buy into the company, and it gives off a bullish image too. Revenue jumped by 37% to $379 million. First half adjusted pre-tax profits were $50.4 million, which was a big increase on the $27.1 million on year ago. The gaming group announced that it expects full year EBITDA to be significantly ahead of expectations.
Royal Dutch Shell shares dropped to a six month low on the back of this morning’s update. The company is following BP down the cost cutting route, as it plans to reduce the head count by up to 9,000 by the end of 2022. The oil titan is hoping to make annual cost savings of between $2 billion and $2.5 billion each year until 2022. The third quarter impairment charge is expected to be $1-1.5 billion. The company, like others in its industry is trying to move away from fossil fuels and gain larger exposure to the renewable energy sector. The hurricanes in the Gulf of Mexico impacted the upstream business by 60,000-70,000 barrels per day. Trading and optimisation within the oil products division will be significantly below that of the second quarter.
Compass Group shares are in the red after the catering group confirmed that it expects to incur an impairment of roughly £100 million in relation to contracts. The pandemic has had a negative impact on the group but it announced that its North American business is picking up now that schools are opening. Compass stressed that its liquidity position is strong and that it has approximately £5 million available.
Boohoo announced a 45% increase in first half revenue to £816.6 million. Pre-tax profit jumped by 51% to £68.1 million. The company is performing well across various divisions. The UK unit saw a 37% rise in revenue and the international business registered a 55% increase. The overseas business now accounts for 47% of group revenue, which is an improvement on the 44% it equated to last year.
US
Stocks are showing decent gains on the back of optimism surrounding the remarks from Mr Mnuchin. Just because, he will have another attempt at reaching a deal doesn’t mean one will be achieved. Traders are taking it as a step in the right direction but it might be a ploy to distract the public from the no-so impressive debate between President Trump and Joe Biden last night.
The US posted some well-received economic announcements. The ADP employment report for September was 749,000, which easily topped the 650,000 consensus estimate, and it was a big improvement on the 428,000 jobs added in August. In the second quarter, the economy contracted by 31.4%, which was fractionally better than the initial reading of -31.7%. The Chicago PMI for September was leaked ahead of its planned announcement time. The reading was 62.4, its highest level since February 2019. Last month, pending homes sales surged by 8.8%, easily topping the 3.4% forecast.
Disney shares are slightly lower as the company will cut 28,000 jobs at its theme park business.
FX
After two days of sizeable falls, the US dollar is higher on the day, although the upward move is relatively small. The dollar was starting from a low base today, and when you take into account the impressive economic data from the US, the move is fairly small. EUR/USD is in the red because of the positive move in the dollar A broad push higher in the pound has assisted GBP/USD. Trade talks between the UK and the EU will remain in focus. We continue to hear the same old lines, that differences remain but it is possible to strike a deal.
Commodities
Gold is in the red because of the upward move in the US dollar, and that prompted dealers to book profits. The metals has enjoyed a largely positive run this week, and in the early hours of today it traded in the $1,900 zone, before turning lower. While it holds above $1,850, the 100-day moving average, the broader bullish trend should continue.
The oil market saw a jump in volatility on the back of the energy information administration report. It showed that US oil stockpiles dropped by 1.98 million barrels, while traders were expecting a build of 1.58 million barrels. Gasoline inventories increased by 683,000 barrels, while the consensus estimate was for a decline of 1.4 million barrels. The energy market is mixed as WTI is up, while Brent crude is in the red.
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