Asian markets were comprehensively lower on Thursday with the Nikkei falling more than -1.1%. Some of the fall was down to more dollar concern, given a helping shove lower yesterday by Steve Mnuchin, US Treasury Secretary, praising the benefits of a weakened home currency. The Hang Seng was down -0.76% while the Shanghai Composite fell -0.31%.
The falling dollar has meant more support for oil prices: Brent crude hit more than $71 overnight, the first time since 2014. There was more zip to sterling also, hitting $1.43 overnight while the euro dipped -0.29% against the pound to 0.8701. Sterling is out-performing all G10 currencies by some margin.
There’s also a growing feeling that increased UK economic robustness will support another UK interest rate rise by early summer. Bank of England governor Mark Carney is taking part in a Davos panel tomorrow – one to watch.
An ECB rate decision arrives later today. The eurozone economy is powering ahead but the ECB needs inflation to pick up. Expect less talk about QE and more focus on inflation and interest rates overall. In short, little change is likely.
- UK FTSE 100 7,643.43 -1.14%
- DAX 13,414.74 -1.07%
- CAC 40 5,495.16 -0.72%
- Euro Stoxx 600 400.79 -0.50%
- Dow 26,252.12 +0.12%
- S&P 500 2,837.54 -0.06%
- Nasdaq 7,415.06 -0.61%
- Nikkei 225 23,669.49 -1.13%
- Gold 1,370.10 +0.63%
- Oil WTI 66.28 +1.02%
Diageo sales up but currency issues linger
Drinks maker Diageo – think flagship brands Johnnie Walker and Smirnoff – this morning released interim six month numbers: reported sales and operating profit are +1.7% and +6.1% higher; organic operating profit is +6.7% up.
“We have,” says Diageo, “delivered broad based improvement in both organic volume and net sales growth. We have increased investment behind our brands and expanded organic operating margin.”
However Diageo warned the current tax environment is “creating increased levels of uncertainty” plus on-going currency volatililty. In the last year Diageo’s share price is up +17.4% but is down more than -5% in the last 30 days. The spirits operator is keeping to its full-year sales goals.
Sky profits head higher
Sky this morning said like-for-like sales increased +5% in the last six months. Profits before tax climbs to £483m compared to £377m this time last year with revenues up from £6.4bn to £6.7bn. There is an +11% hike in earnings per share to 31.3p.
“We've seen good customer demand for our products and services. We now have almost 23m customers taking 61.7m paid-for-products and making 20m pay-as-you-go buys in six months.”
Sky says it expects the consumer environment to remain "challenging".
Breaking news: Estate agent Foxtons has issued a profits warning – earnings could slip to £15m from more than £24m last year. “We are well placed to withstand these conditions due to our strong balance sheet with no debt.”