British voters make for the polls today. Currency volatility is likely to be sharper as results emerge early Friday. For the moment (7am) the GBP/USD pair is at 1.2958 while the EUR/USD pair is at 1.1258.
However expect more volatility from ex FBI director Comey plus an ECB monetary policy decision which will drive euro-related matters – money is on a milder response from Draghi regarding future stimulus moves.
This morning German industrial production numbers are out – up 0.8%, well above the 0.5% number predicted thanks to stronger energy production. The ECB interest rate verdict is at 12.45pm.
- UK FTSE 100 7,478.62 -0.62%
- Dow 21,173.69 +0.18%
- S&P 500 2,433.14 +0.16%
- Nasdaq 6,297.38 +0.36%
- DAX 12,672.49 -0.14%
- CAC 40 5,265.53 -0.07%
- Nikkei 225 19,917.47 -0.34%
- Gold 1,288.50 -0.36%
- Oil WTI 45.99 +0.59%
Bill Gross warns on market valuations
Meanwhile a warning from Bill Gross of the Janus Global Unconstrained Bond Fund that investors are paying too much for stocks – US market risk, says Gross, is at its highest level since the 2008 financial crisis. He part-blames loose monetary policy.
“Money is being pumped out into the system and money that is yielding less than nothing seeks,” he said in an interview with Bloomberg TV, “a haven not only in bonds that are under-yielding but in stocks that are overpriced.”
Gross has consistently warned of market over-valuations. Recently Marc Faber, aka ‘Dr Doom’, also warned (again) of a market bubble. “We are somewhere between 1999 to 2000,” Faber said, referencing the tech bubble.
Topshop profits tumble
Profits at Topshop are down sharply. Accounts from Companies House for Taveta Investments, Philip Green’s company, show pre-tax profits tumbled to close to £37m up to 27 August 2016. This is in contrast to more than £172m the year before.
Total sales slipped 2.5% to £2.02bn. Taveta says trading conditions suffered due to the slip in the value of sterling, plus the on-going uncertainties of Brexit. It has also had to absorb one-off charges relating to its BHS responsibilities, as well as significant pension pressure from the BHS pension scheme.
BHS collapsed in April 2016. Exceptional costs are thought to be close to £130m compared to £12.2m the previous year. Green’s empire includes Topshop and Dorothy Perkins. There has been repeated warnings of the ability of UK consumers to sustain spending levels as inflation for basics, including clothes, picks up.
Less worry on used motors
FTSE 250 operator Auto Trader Group announced this morning that full year revenues were up 9% to £311.4m while underlying operating profits climbed 19% to £207.2m.
Basic earnings per share rises 22% to 15.64p compared to 12.67p this time last year. There’s a proposed final dividend of 3.5p per share taking the total to 5.2p for the year. Chief exec Trevor Mather acknowledged new car registrations were under pressure but Mather saw little tail-off in used car transactions.
"After a number of years of near uninterrupted growth, and despite the exceptionally high performing first quarter of the calendar year, the industry now expects new car registrations to plateau or decline but continues to anticipate growth in used car transaction volumes.”
Breaking news: More electricity in the UK has been sourced from wind, nuclear and solar than from gas and coal combined according to the National Grid.