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Reflect & Prepare

Reflect & Prepare

Fri, 11th Aug 2017 - Author: Reflect & Prepare

This week geopolitical news has been the main driver in the markets, North Korea have threatened to attack the US island of Guam where many US soldiers are based and Donald Trump decided to retaliate with Game of Thrones style retorts. Rather than go into who said what and when lets look at how it affected the markets.

Gold was one of the main beneficiaries of the saga. The yellow metal broke the major weekly trendline to trade higher by 3.25% from its lows. Yen also affirmed its safe haven status after USD/JPY fell 1.9%, but the biggest move was the decline in stocks. Nasdaq (-3%), S&P (2.1%) and Dow (1.5%) all took a turn as the Vix jumped above the 15 per cent mark for the first time since late June. Obviously the chances of war are unlikely, but after brexit and Trump getting voted in who knows!.

Data calmed down this week after a few weeks of madness, the main event was today when US CPI disappointed. The Fed have been talking about inflation for months and today's reading didn't help matters, we must remember it takes some time for the effects of a weaker USD to filter through. Elsewhere this week, UK manufacturing came in as expected at 0.0% for June, which led the GBP to rise but much of this move was attributed to USD weakness as much as GBP strength, nevertheless GBP still finds itself subdued due to the BoE meeting last week.

In corporate news, home builders had a difficult week as the RICS house price data came in much worse than expected and news spread of the help to buy considerations. Persimmon, Taylor Wimpey and Barrett all fell but spent the rest of the week climbing up to pre-announced levels.

Bookmaker Paddy Power Betfair fell earlier in the week after confirming that chief executive Breon Corcoran will be stepping down after 16 years in the job. The  group stated interim revenue growth would be up 9% and underlying EBITDA up 21%.

InterContinental Hotels fell 10% during the week as interim dividend increase was not enough, as  growth in revenue per available room (revpar) slowed to 2.1% from the 2.7% at the start of the year.

Legal & General reported a 43% jump in half-year profits before tax to £952m and a EPS rise from 11.27p in the year-ago period to 15.94p. Despite the result the life insurer has fallen from recent highs to trade around the 268.60 mark.

Cineworld shares recovered from a recent dip in form this week after stating interims came in slightly above forecasts, with new openings on track and a strong second-half film slate underpinning full-year expectations.

Dixons Carhone shares fell sharply today as Exane BNP Paribas downgraded the stock from 'outperform' to 'underperform' on concerns about changes in the mobile phone market.


Looking ahead:

Data: Japanese and German GDP, Chinese industrial production, UK CPI, FOMC meeting minutes, UK retail sales and Canadian CPI.

Earnings: Hargreaves Lansdown, Admiral Group, KAZ Minerals, Hikma Pharmaceuticals, Balfour Beatty


Kind Regards

Rajan Dhall



The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.


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