Weak earnings a drag on FTSE
Fiona Cincotta January 30, 2020 9:50 AM
UK corporate earnings are not painting a pretty picture this morning, coming at a time when the spread of the coronavirus is already eroding the outlook for some companies.
UK corporate earnings are not painting a pretty picture this morning, coming at a time when the spread of the coronavirus is already eroding the outlook for some companies. The FTSE is trading down almost 0.6% but home builders and utilities are providing some counterbalance.
BT is the most heavily sold stock after the telecoms firm reported a drop in third quarter revenue and warned that limiting the role of Huawei in Britain’s 5G expansion will increase the cost of its own gigabit plans by £500m .
Shell blamed a drop in the oil price in the last quarter on a 23% decline in its earnings and a far deeper plunge in net profits. Investors sold off the share in sync with rival BP in anticipation of a similar set of results from BP next Tuesday.
In a more normal situation in the markets BP would have been granted a little bit of respite given that oil prices have risen since the current reporting period, during the inflamed Iran-US tensions in early January. However, now that the coronavirus seems to have got its hooks into parts of China, the outlook for oil prices is beginning to deteriorate. Brent crude has dropped below the $58 mark and is unlikely to show any signs of recovery until China is free of the virus and back to being fully operational.
Pound slides ahead of BoE decision
The Bank of England is back in session today and for once the outcome is less than a given. In the lead up to this rate setting meeting four of the nine members indicated that it may be time to cut rates to help revive the UK’s slowing economy, but since then the UK’s economic indicators have started improving slightly, particularly in the housing market. The “what happens after Brexit” remains the big unknown and although investors seem to have less immediate concerns it is still not clear how Brexit will play out for businesses over time. The pound is a touch lower against the dollar and losing more ground versus the euro.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.