The FTSE 100 closed down 1.1% at 7,128.18 on Thursday (22 August) as sterling surged on suggestions from Europe that the Brexit deal could be changed ahead of the 31 October exit date.
Next Tuesday (27 August) there is a reading of US consumer confidence. This is always a fairly significant release as financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity in the US. Next Wednesday (28 August) US crude oil inventories are published which may add to the current volatility in energy markets. Next Thursday (29 August) a second estimate of US GDP for the second quarter of 2019 is out. Investors will be alive to any adjustment to the 2.1% growth seen in the initial print. Next Friday (30 August) there is an update on Eurozone inflation which will offer some insight into how much scope the European Central Bank has to boost the economy with rate cuts and financial stimulus.
The mining sector took the spotlight this week as two of its heavyweights updated the market. On Tuesday (20 August) BHP (BHP) reported, for the year to 30 June, a 124% rise in attributable profit to $8.3bn, after last year’s results were dented by heavy impairment charges related to the sale of its US shale assets and costs associated with the Samarco dam disaster in Brazil. It also declared a record dividend of 78 cents per share, equating to a 6.2% dividend yield. The results and dividend were in line with expectations, and while such performance was welcomed by analysts, they also picked up on the fact that productivity fell by $1 billion, in contrast to the $1 billion improvement in productivity that was expected. Productivity in mining is defined as more output for fixed input or the same output for less input. On Thursday (22 August) FTSE 100 copper miner Antofagasta (ANTO) reported half year results that saw 19% growth in revenue and a 44% rise in earnings before interest, tax, depreciation and amortisation (EBITDA). EBITDA of $1.3bn was reported on $2.52 billion revenue, while the group also managed to slash $78.9 million off net debt, to $517.4 million. The company also confirmed that it remains on track for record copper production of between 750,000 and 790,000 tonnes, with higher production at all of its mines.
The US crude oil inventories report next Wednesday (28 August) could help influence the short-term direction of oil prices. The latest weekly number showed a weekly decrease in domestic crude supplies, the first in three weeks, but smaller than the market expected.
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29 August – Results for the 12 months to 30 June from recruitment firm Hays (HAS) may offer some insight into the health of the global economy as well as the business itself, given the impact of fluctuations in growth on hiring and firing. The company has an international footprint and has already announced disappointing fourth quarter trading, so the focus will be on the outlook comments which accompany the numbers.
29 August – Much of oil services firm Hunting’s (HTG) recent success has been built on its Titan business benefiting from strong US demand for its perforating gun, a device used to penetrate oil and gas wells in preparation for production. Margins came under pressure here thanks to strong competition earlier this year. Investors will therefore be watching closely for an update on trading for Titan when the company reports first half results
Over the past two weeks increased turbulence on global stock markets has led many market commentators to ruminate on the possibility that the decade plus long bull run will soon come to an end. So, what precautionary actions can you take?
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