Sea of red in the markets this morning with FTSE
|Seeing red
There is a sea of red in the markets this morning with the FTSE, oil and the pound all trading lower. The London index is being pulled down by oil stocks and travel operator TUI with moves slightly exaggerated as trading floors are quieter than usual because of the summer holidays. Most European indices are also trading in negative territory with the exception of the DAX, which is struggling around the flat line.
The pound is flirting with recent lows and is trading at 1.2858 against the dollar and 1.1094 against the euro.
On the red note, the US said on Wednesday it will bring in new sanctions against Russia by the end of this month because of the nerve-agent attack against a former Russian spy Sergei Skripal. The move, however, will also hurt US companies which export millions of dollars’ worth of technology like turbines and calibration equipment to Russia.
Travel sector experiencing its own, not very pleasant, heat wave
Ryanair continues to be embroiled in a long running dispute with its pilots over wages and is facing industrial action on Friday, one of the busiest days in the summer travel season, now that the company’s German pilots have said they will join their peers from Ireland, Belgium and Sweden for a walkout. The Irish budget airline was due to run 2,400 flights on Friday to take passengers to their summer holiday destinations but said this morning it has cancelled 250 flights for the day.
Anglo-German travel operator TUI is also having a bad day. The company’s shares plunged nearly 9% after it said that it made a net loss in the third quarter of this financial year of €110.5 million. Although the company said that it is sticking to its guidance of double digit growth this year the market seemed highly unconvinced and bid the stock lower.
Copper rallies, helps miners
Chilean miner Antofagasta is topping the list of FTSE risers helped by the fact that copper is one of a few commodities not trading in the red this morning. Instead the red metal is up 0.87% and Antofagasta is trading 1.21% higher. Metals trader Glencore, which last week said that it increased its production of copper in the Democratic Republic of Congo by 31%, is also trading up 0.7%.
Cineworld result sure to help win over naysayers
There was once talk in the market that Cineworld had overpaid for Regal, but this result will surely help win over the naysayers.
Cineworld has timed its US expansion perfectly, benefiting from a string of blockbuster releases there just as growth in the UK was waning
A bumper box-office performance from films such as Black Panther has underpinned soaring revenue growth in the US.
In the UK, warm weather and the World Cup hasn't hurt demand as badly as feared, with revenue rising in that market too, albeit much more modestly.
Cineworld's fortunes will largely be tied to the film release cycle and its performance could just as easily be hurt by a string of dud movies. But with the US economic recovery in full swing, ticket prices are rising. Cineworld also has plenty of scope to refurbish existing cinemas, improving demand across the release cycle.
The interim dividend has, not surprisingly, been cut to 4.85 US cents per share. Net debt was pushed higher by the Regal acquisition and Cineworld will will want to conserve some capital to invest in refurbishments.
Legal & General continue to perform reasonably well
Choppy markets and lower mortality releases may have sent profits south but there's no great cause for concern in this result.
Legal & General's underlying business continues to perform reasonably well and its dividend has been hiked 7%, maintaining its status as one of the UK's best yield plays
The general insurance division was always expected to take a hit from the Beast from the East. Otherwise, the rest of the company's divisions have all grown their operating profits.
Retiring baby boomers are pushing up demand for annuity and other investment products, while government policy -- such as auto enrollment for defined benefit pensions -- encourages more money to find its way into Legal & General's products.
The lifetime mortgages market is proving to be a promising new business line for the company, as cash-poor retirees look to unlock value tied up in their homes.
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