Markets in Europe have started the day on a rather mixed note after a strongly positive session yesterday, with investors cautious ahead of the conclusion of today’s latest Federal Reserve rate meeting, as well as awaiting the latest economic forecasts from the OECD which are due at 10am this morning.
It’s a big day for IPOs with the launch on THG Holdings, otherwise known as the Hut Group, while later today when US markets open we get the IPO of Snowflake a fairly well established company in the very competitive space of cloud computing and data warehousing, where it is competing in the sandbox of the likes of Amazon, Oracle, Alphabet and Nvidia.
On the earnings front Inditex has followed in the footsteps of H&M yesterday by posting numbers that were better than market expectations, returning to profit in Q2, coming in at €214m, even though it wasn’t enough to generate a H1 profit, with the business posting a modest net loss of €195m.
Net sales in the first half of the year came in at €8.03bn, with gross margins only slipping modestly from 56.8% to 56.2%. On line sales came to the rescue in this regard, rising 74%.
Overall sales still saw a decline overall, however the decline in Q2 was much more modest at -31% than in Q1 which saw fall of -44%. On the second half of the year, the direction of travel is clear that there will be an improvement, with the only unknown being a matter of degree. In terms of Q3 the outlook is more positive, with activity slowly returning to normal, with store and on-line sales down 11% from the same period a year ago.
Redrow Homes shares are slightly lower after full year profits came in slightly below estimates. The coronavirus shutdowns in March and April were part of the reason for the missed lowered expectations. Pre-tax profits fell by nearly two thirds to £140m for the year, while completions fell 37%, to 4,032. On the plus side the forward order book continues to look fairly solid, up 39% with up to £1.42bn of work in the pipeline.
Forward reservations are also higher, though some of that may well be a release of pent up demand after the closures of earlier this year.
Construction company Galliford Try shares have seen a decent start to the day after reporting final results that saw pre-tax losses come in at £34.6m, a marked improvement on the 2019 losses of £64.5m.
More importantly the company expressed optimism about the future as its order book rose to £3.2bn with over 90% of revenue for 2021 secured. Management also restored their guidance for the upcoming year with expected revenue of between £1.1bn and £1.3bn for the 2021 fiscal year. Whisper it quietly but maybe the worst is behind Galliford as it continues its turnaround plan.
There was little in the way of movement for the pound after the latest UK CPI numbers for August showed that inflationary pressure declined from 1% to 0.2%, while core prices fell to 0.9%, a five year low. The main downward drag came from lower prices in restaurants and cafes, due to the “eat out to help out” campaign, as well as lower air fares and clothing prices.
Factory gate prices also came in lower, declining by 5.8% year on year, in a sign that might prompt the Bank of England to consider the prospect of further stimulus when they meet later today, ahead of the rate decision tomorrow morning.
US markets look set to open higher after their late sell off last night which saw stocks close well off their intraday highs, ahead of today’s Federal Reserve rate meeting. The Fed’s main challenge is likely to be how to square any tweaks to its growth and inflation forecasts with details of how it intends to implement its new policy of average inflation targeting.
Apple shares just about managed to finish the day in positive territory after rolling over late on in disappointment that there was no further detail on the next iPhone.
It’s also a big day for Snowflake, a well-established cloud computing and data warehousing company that is coming to market today on a price tag of between $100 to $110, valuing the business at $30bn.
US retail sales for August are also expected to be scrutinised for any evidence of consumer caution or weakness in the wake of the ending of the $600 a week unemployment top-up at the end of July.
Dow Jones is expected to open 78 points higher at 28,073.
S&P500 is expected to open 10 points higher at 3,401.
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