No-deal Brexit fears and signals the European Central Bank is on the cusp of cutting interest rates led to volatility in sterling and the euro on Thursday (25 July) but the FTSE 100 index closed broadly flat just below the 7,500 mark.
In the early hours of Tuesday (30 July) morning, the Bank of Japan is set to unveil its latest move on monetary policy. Later the same day, a reading of US consumer confidence is published; this might offer some clues as to the really big central bank decision of the week on Wednesday (31 July) when the US Federal Reserve pronounces on interest rates (see Economic update). The Fed’s counterparts at the Bank of England meet next Thursday (1 August) for the first time under the leadership of new Prime Minister Boris Johnson, whose cabinet appointments appeared to reinforce his commitment to a hard Brexit. Next Friday, US non-farm payrolls are published; the earliest release based on hard data to offer an insight into the health of the world’s largest economy.
On a busy week for company results, numbers from pharmaceutical giants AstraZeneca (AZN) and GlaxoSmithKline (GSK) shone out as being particularly healthy. On Wednesday (24 July), GlaxoSmithKline announced second quarter results ahead of expectations and increased its full year guidance. Adjusted earnings per share for the 12 months to 31 December are now expected to show a decline of 3 - 5% on a constant-currency basis instead of a fall of 5 - 9%. The company also confirmed that the 2019 dividend would be maintained at 80p per share year, which will come as a relief for income investors after cuts at several other big FTSE dividend payers this year. Taking some of the shine off the raised outlook is a lower than expected operating margin of 19%, as a result of a 16% increase in investment. Arguably, even more impressive was the first half update from AstraZeneca as it upgraded sales guidance to low double-digit growth from the prior high single digit expectation. First-half product sales grew 12% to $11.2 billion and included an acceleration in second-quarter product sales to $5.7 billion. The second quarter saw every sales region and all three therapy areas deliver an encouraging performance. Its oncology drugs continued to lead performance delivering 51% growth in the quarter.
Next Wednesday (31 July), in an event investors have been looking towards for some time, the US Federal Reserve is set to announce its latest decision on interest rates. Market expectations are for a cut and if the Fed fails to deliver there is likely to be a negative reaction.
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30 July – Food outlet Greggs (GRG) has been a roll in 2019, a vegan sausage roll that is. The spectacular success of this plant-based pasty driving a series of upgrades to the company’s earnings. With heavier foods likely to prove less popular over the summer, investors will be watching first half results closely to see if the momentum in the business is being maintained.
31 July – First quarter numbers from banking firm Lloyds (LLOY) were a little light of expectations when they were reported in May but full year guidance was left intact. If the negative trend has continued in the second quarter, the company may find it more tricky to stick with its targets so first half results are likely to be closely watched. With the threat of a no deal Brexit perceived to have increased, management may also be asked how well prepared they are for such an outcome.
Narendra Modi and the BJP look set for victory in what has been a gargantuan undertaking for India and stock markets have surged to record highs on early results.
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