The consensus is that the US Fed will hike rates by 25 basis points today. While that (possible) decision is already pretty much priced in, the bigger story is the Yellen emphasis on the US balance sheet, inflation and unemployment expectations.
Most markets are trading flat until the US rate decision comes through though Yellen’s move will be after Asian and European trading. Overnight the euro was up slightly to $1.1217 while sterling was steady at $1.2747, buoyed yesterday by stronger inflation data.
Aside from the Federal Reserve update, US retail sales turn up at 12.30pm plus retail sales at 1.30pm. US business and crude oil inventories arrive later in the afternoon. EU industrial production numbers are out mid-morning.
- UK FTSE 100 7,500.44 -0.15%
- Dow Jones 21,328.47 +0.44%
- S&P 500 2,440.35 +0.45%
- Nasdaq 6,220.37 +0.73%
- DAX 12,764.98 +0.59%
- CAC 40 5,261.74 +0.40%
- Nikkei 225 19,927.50 +0.14%
- Gold 1,271.70 +0.24%
- Oil WTI 45.94 -1.12%
Strong BAT pricing
The main FTSE 100 news this morning is Benson & Hedges owner British American Tobacco, reporting a first half earnings per share tailwind “of around 14%” at constant exchange rates. First half revenues are expected to gain from good pricing says BAT though conditions are more “challenging” in Brazil, South Africa, the UK and France.
“Profit growth is expected to be weighted to the second half of the year,” says BAT, “mainly due to the timing of volume shipments, as well as the phasing of NGP [Next Generation Products] investments and marketing spend.”
BAT investors can’t complain about returns: its share price has soared more than 28% in the last 12 months and is up more than 17% year-to-date; despite huge currency volatility, a strong year.
WH Smith sales creep up
We move onto WH Smith. For the 15-week period 1 March to 10 June group sales were up 2% though like-for-like sales were flat. Total sales for its travel business climbed 8% with like-for-like up 5%.
“In our High Street business we continue with our profit focused strategy, with sales in the period in line with expectations. Total sales were down 4% with like-for-like sales also down 4%,” says WH Smith.
Gross margin improvement and cost savings have been delivered claims the high street retailer who remains “confident" still on the full year outcome. At 1,734.16p WH Smith shares are up 7% on the year and 12% higher year-to-date.
Bellway reservations increase
A quick look at FTSE 250 housing player Bellway. For the trading period 1 Feb to 4 June Bellway claims a 13% increase in its reservation rate to 221 per week while “robust” trading should mean an operating margin in excess of 22% for the full year.
The value of the property forward order book due for completion beyond 31 July is ahead at £900m (2016 – £846m) claims Bellway.
“We have made a significant investment in land and work in progress over a number of years and this, together with a strong balance sheet and substantial operational capacity for expansion, should ensure Bellway is well positioned to deliver further volume growth,” says chief exec Ted Ayres.
Breaking news: Deputy policy chief for the City of London Mark Boleat rejects UE proposals to steer euro-clearing back to mainland Europe.