10/05/2016
Easyjet sinks into red on weak demand
Budget airline Easyjet announced a larger-than-expected half-year loss on Tuesday, after terrorist attacks and strike impacted on sales.
The company disclosed a pre-tax loss of £24 million for the half year to March, a huge decrease from a profit of £7 million the year before. Analysts are expecting the company to report a pretax profit of £721 million for the 12 months ended September 30th.
Easyjet are the latest in a string of airline groups to be hit by weaker demand following terrorist attacks on European cities, including British Airways owner IAG and Lufthansa.
Shares are trading up 2.01 percent on the news, at 1499.54 (1122GMT).
Morning Round-Up: Retail spending down, businesses change heart over EU, German economy stable
High street hit by cold weather, says BRC
The unusually cold spring has hit demand on the high street, with retail spending flat for the second month in a row in April.
The latest figures from the British Retail Consortium showed a weak demand for fashion and footwear, with consumers sticking with their old winter clothes in the face of chilly weather.
“Flat total sales mask a very mixed picture: some retailers benefiting from the healthy housing market, while other are evidently more susceptible to the effects of lower consumer confidence,” BRC chief executive Helen Dickinson said.
On a like-for-like basis, sales fell by 0.9 percent in April – their worst performance since August of last year.
Gap narrows between Leave and Remain in the business sector
More business people are planning to vote Leave in the upcoming EU referendum that initially thought, according to the latest survey by the British Chambers of Commerce.
54% of its 2,200 members surveyed in April said they would vote Remain, down from 60% in February’s survey.
37 percent will now be voting to leave, a 7 percent increase on two months ago.
However, 90 percent of those surveyed said they were now unlikely to change their opinion ahead of the vote.
Mixed quarter for German economy, but overall strong
The German economy has had a mixed quarter, with a drop in industrial output offset by a surprising increase in exports.
Industrial output fell 1.3 percent, well above the 0.2 percent forecast by analysts and its biggest decline since August 2014. However, foreign demand from outside the eurozone drove factory orders throughout March, propping up the economy.
Industrial output rose by 1.8 percent overall on the quarter:
“The industrial sector has overcome its foreign trade related weak phase of the second half of 2015,” the Economy Ministry said. “The economic trend in the industrial sector is currently pointing upward.”
10/05/2016
Crowd2Fund’s Chris Hancock: “A controlled launch of the Innovative Finance ISA is critical”
Recently, questions have been asked about the way the government and regulators have brought the new Innovative Finance ISA (IF ISA) to market. We think differently.
With any new product it is wise not to have an overly aggressive launch, which, as we’ve seen, can ruffle some feathers. By launching the IF ISA with only the few properly regulated platforms,rather than the entire P2P market, the launch can be more effectively controlled by government and regulators. Another advantage of launching the IF ISA with newer platforms is to allow these potentially challenging and more innovative platforms to offer more competition and choice in the marketplace. Failure to do this could result in a monopoly, similar to the one operated so dangerously by the large banks prior to the financial crisis.
It must be considered that implementing business procedures to manage the IF ISA across the entire sector and government departments will be no easy feat. The current approach will give businesses and government departments time to build the required processes without being overwhelmed with huge volumes and thus ensuring a smoother transformation of the ISA market. As this is an opportunity of up to £400 billion in potential investment funds, care must be taken in order to make sure that this development is not wasted and that investor funds are safeguarded.
One particularly onerous task with the roll out of the IFISA is that all IF ISAs across every platform must be reported to HMRC; this can only be achieved when post-launch volumes and nuances have been identified. Putting this in place requires a clearly thought through, properly defined strategy so as not to disrupt legacy reporting processes for other cash or stocks and shares ISAs. We are confident the government and regulators are working towards this plan. Giving newer players a boost will increase competition, which will accelerate innovation and the service provided for the consumer. This is the primary motivation for developing these new products in the first place. Our first-to-market IFISA app is a great example of this.
Crowd2Fund is one of the few crowdfunding platforms which is directly FCA regulated and is the only platform offering both debt and equity investment types. Whilst gaining full FCA certification was a lengthy process, it has helped us offer our customers a best-in-class service. We believe it is taking time for the older platforms to become regulated due to the enormous operational and technical shift required to build a robust platform that is compliant with the strict FCA standards, which are notably higher than the previous obligations of P2P platforms. If platforms continue to steam ahead without these processes in place, the financial services sector will be vulnerable to even greater risk, possibly compromising the security and credibility of the UK economy at large, as well as the FinTech industry. At Crowd2Fund we’re thrilled to be offering our IF ISA at a generous 8.7% APR return* and help ambitious, innovative British businesses grow at the same time. We will continue on our path of slow, steady, sustainable growth whilst continuing our aim to offer consumers the best product and service in the marketplace.Chris Hancock, CEO of Crowd2Fundwww.crowd2fund.com *APR quoted is before fees and bad debt
“Peace in Europe at risk” without the EU, says David Cameron
Peace in Europe could be at risk is Britain decides to leave the EU, David Cameron has warned, as polling day grows closer.
The Prime Minister said that Britain has regretted “turning its back” on Europe in the past, and said that the EU was central to peace-keeping within Europe. He argued that “isolation” has never served Britain well, continuing: “Can we be so sure that peace and stability on our continent are assured beyond any shadow of doubt? Is that a risk worth taking? I would never be so rash as to make that assumption.” However the ‘Out’ campaign has called this argument into question, saying that regardless of whether the country votes to leave the EU NATO will keep Britain safe. With the 23rd June polling day just over a month away and local elections out of the way, campaigns on both sides are heating up. View our video of how the campaigns stand so far below:
Morning Round-Up: House prices fall – Halifax, Facebook wins in Chinese court, Greggs up
House prices fall, say Halifax
British house prices fell more sharply than expected in April after the introduction of a new tax on the purchase of rental properties, according to mortgage lender Halifax.
House prices fell by 0.8 percent in April, double what was expected by economists and down from a 2.2 percent jump in March.
House prices also slowed on the year, rising by 9.2 percent in the three months to April, down from 10.1 percent in the three months to March.
China rules in favour of Facebook in trademark row
A court in Beijing has ruled in favour of Facebook and against the Zhongshan Pearl River company, who registered the name ‘face book’ as a trademark.
The court said they had “violated moral principles” with “obvious intention to duplicate and copy from another high-profile trademark”.
This ruling was made despite Facebook being banned in China, leading to speculation that the country’s stance against the social media site may be softening. During a recent visit, Facebook founder Mark Zuckerberg met with China’s propaganda chief Liu Yunshan and media guru Jack Ma.
Greggs shares up despite “softer” trading conditions
Sales growth at bakery chain Greggs slowed over the last quarter after tough March trading conditions.
Like-for-like sales were up 3.7 percent in the first 18 weeks of 2016, down from the 6 percent increase this time last year.
In a statement, the company said:
“As has been widely reported, conditions on the High Street were softer in March before recovering in recent weeks; these conditions were reflected in our own performance.
“Input cost inflation remains low despite increased wage costs… we expect to make progress in line with our previous expectations”.
Shares are currently up 5.34 percent at 1,125.00 (0930GMT).
09/05/2016
Morning Round-Up: Asian shares fall, UK services slowing, Alibaba profits triple
Japanese shares fall after market holiday
Japanese markets fell this morning after a break from trading for a three-day bank holiday, with investors remaining cautious before US jobs data released later.
Japan’s benchmark Nikkei 225 index was down 0.7 percent at midday, after a 0.4 percent jump at the start.
Most Asian markets followed this trend, with the Shanghai Composite closing down 2.82 percent, and the Hang Seng down 1.79 percent.
Service sector slows British economy to worrying levels
The British economy slowed in April on worries ahead of the EU referendum to the point of possible rate cuts, according to a new survey of the services industry.
Economic growth may drop to just 0.1 percent in the run-up to the vote – its weakest rate since 2012.
Markit chief economist Chris Williamson said yesterday’s fall in the service industry, the UK’s traditionally dominant sector, may lead to the Bank of Englang using monetary policy to “revive growth” – as it has done at these levels in the past.
Alibaba profits soar by a third
The world’s biggest e-commerce company, Alibaba, saw profits trip in the year to March 31st.
Profits saw a rise of 193 percent, with sales rising by 101 billion yuan. Chief executive Daniel Zhang said the company had “finished the fiscal year on a very strong note.”
The company has recently been struggling in the light of newer competitors such as Baidu and JD.com, with shares dropping by a third. However, these strong results may be a sign that the company is getting back on track, with shares on the New York market rising nearly 4 percent.
06/05/2016
News Corp hit by net loss after US fine
Rupert Murdoch’s media empire New Corp reported a net loss of $149 million for the three months to March, after being hit by a $280 million legal charge in the US.
The group also saw revenue fall 7 percent and revenue from its Harper Collins publishing arm fall 11 percent, citing “currency headwinds” as a reason for the fall.
News Corp’s Chief Executive Robert Thomson called the company’s third quarter performance “disappointing”, adding that the company was:
“on track to see improvements in the fourth quarter, with the expansion of our digital real estate business, foreign currency comparisons hopefully beginning to ease, and cost saving initiatives taking firmer root.”
Shares remain largely unaffected in pre-trade, up 0.16 percent at 12.17 (0804GMT).
06/05/2016
Service sector slowest in three years – Markit
Growth in the UK’s services sector, the key to the UK’s economic growth, fell to its weakest in more than three years in April.
According to the latest survey by Markit, the Business Activity Index fell sharply to 52.3 from 53.7, the lowest since February 2013. Any figure above 50 shows growth.
Chris Williamson, chief economist at Markit, commented:
“The slowdown in the service sector follows similar weakness in manufacturing and construction to make a triple whammy of disappointing news on the health of the economy at the start of the second quarter. The PMI surveys are collectively indicating a near stalling of economic growth.”
05/05/2016
A Brit’s guide to summer investing
With the summer months fast approaching, investors are already looking for new investment ideas that can maximise their returns. Below is every Brit’s guide to summer investing.
Stocks – trade them sparingly
Many investors are familiar with the phrase, “Sell in May and then walk away.” That’s because May 1 represents the end of the strongest six months of the year for stocks, according to the Halloween trading strategy. This strategy has rightly noted that stocks perform better in the winter months than in the summer. Investors abiding by this strategy enter into stocks on October 31 (Halloween) and sell six months later on May 1.
This doesn’t mean that no one trades stocks after May. You just need to be much more meticulous in your picks. The FTSE 100 Index – London’s benchmark stock gauge – has had a dismal year, but not every sector has performed badly. Beverages, chemicals, food and drug dealers, industrial engineering, industrial metals and miners are just some of the FTSE sectors that have outperformed the market average in 2016.
Precious metals – ride the safe haven rally
Gold prices have surged over 16% in 2016, as the combination of volatile stock markets and slowing global growth have boosted precious metals demand. The precious metals rally hasn’t been limited to just gold. Silver prices have outperformed the yellow metal through the first four months of the year, rising nearly 18% over that period.
The gold-silver ratio, which is used by investors to determine when to buy and sell precious metals, has plunged in recent weeks. As of April 15, the gold-silver ratio was 75.61. This essentially means it requires 75.61 ounces of silver to buy one ounce of gold bullion. The ratio was as high as 83.5 just a few months ago.
According to analysts, silver has a lot more going for it than just haven demand.
“Silver prices have benefited from the recent upswing in gold prices, but are also supported by a collapsing base metal industry, which is slashing mining and exploration projects to counteract weak Chinese demand,” wrote Sam Bourgi in a March 21 article on Economic Calendar. “About two-thirds of the world’s silver output is a by-product of base metal extraction. As producers slash output of zinc, copper and led, less of the grey precious metal is being unearthed.”
A weakening US dollar generally adds credibility to precious metals. According to the CME FedWatch Tool, which allows investors to track expectations of when the US Federal Reserve will raise interest rates, US policy will remain highly accommodative for the rest of the year. Low interest rates are often a boon to precious metals because they keep the dollar bulls at bay. Please rephrase
Sterling volatility
Pound sterling has had a rough year. At its lowest point, it was trading at more than seven-year lows against the US dollar. Much of the decline has been attributed to fears about Britain’s upcoming vote on European Union membership, which is slated for June 23. Investors may expect a great deal of volatility for the pound before and after the vote (there’s no predicting what would happen should Britain vote to leave the EU). Brexit-induced volatility might create opportunities for the GBP/USD and EUR/GBP pairs. However, multi-year lows are unlikely to be sustained in the event that Britain votes to stay in the EU.
According to a recent YouGov poll, the Remain camp holds a slim lead two months before the vote. YouGov found that 40% of Brits wanted to remain part of the EU versus 39% who wanted to leave. Sixteen percent were undecided and 5% did not intend to vote.
According to Bloomberg’s Brexit Tracker, there’s only a 22% chance that the UK leaves the 28-member EU on June 23. However, even Bloomberg realizes polls are never perfect. Polling for the 2015 UK general elections was notoriously bad, according to the British Polling Council. Most polls showed a close race between the Conservative and Labour parties in the run-up to the 2015 elections. The result? The Conservatives trounced the competition, winning their first outright majority since 1992.
Stay abreast of the market
As you’ve no doubt noticed, the outlook on the financial markets can change rather quickly. No one would have predicted last summer’s epic stock market collapse, which wiped trillions of dollars from the global exchanges. With China’s economy slowing even further in the first quarter, the country’s central bank may resort to drastic moves to curb capital flight from the country.
Aggressive monetary policy in other parts of the world is also intended to shore up investor confidence. Don’t be surprised if the Bank of Japan announces plans to ease monetary policy even further in the coming months or for the European Central Bank to defend negative interest rates.
On the whole, 2016 was forecast to be a low-yield environment. Equity markets have performed well since mid-February, but it took a massive selloff in the first six weeks of the year to create the illusion of strong performance. Make no mistake, all signs seem to indicate we are at the tail end of the bull market.
To keep up to date on the latest developments in the global financial markets, be sure to follow the financial calendar.
For more information, visit www.easymarkets.com
Nikolas Xenofontos, Director of Risk Management at EasyMarkets on 05/05/2016Risk warning: Forward Rate Agreements, Options and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you understand fully the risks involved and do not invest money you cannot afford to lose. Our group of companies through its subsidiaries is licensed by the Cyprus Securities & Exchange Commission (Easy Forex Trading Ltd- CySEC, License Number 079/07), which has been passported in the European Union through the MiFID Directive and in Australia by ASIC (Easy Markets Pty Ltd -AFS license No. 246566).
Morning Round-Up: Morrisons Q1 success, Trinity Mirror close new paper, Rolls Royce stable
Morrisons reports success in Q1
Morrisons has reported its second consecutive quarter of positive results, suggesting CEO David Potts may be beginning to turn the store around.
Britain’s fourth largest supermarket has struggled over the past four years, reporting consistent profit decreases. However, Potts has implemented a scheme to revive the flagging chain, improving store standards, cutting prices and tailoring stores which now seems to be having an effect.
Sales at stores open over a year, excluding fuel, rose 0.7 percent in the 13 weeks to May 1st, with like-for-like transactions growing 3.1 percent. Volume growth was “strong”.
“We are of course pleased with a second consecutive quarter of positive lfl (like-for-like) sales, which demonstrates our aim to stabilise trade is taking effect,” said Potts.
Shares are up 2.03 percent at 191.50 (0909GMT).
Trinity Mirror to close ‘New Day’ paper
Newspaper publisher Trinity Mirror has announced the closure of the ‘New Day’ publication after just nine weeks.
Circulation was below expected figures, with the new paper failing to attract sales in a fiercely competitive market. In a trading statement, the company described trading conditions as “volatile, but that performance would remain within expectations.
Group revenue fell 8.6 percent on a like-for-like basis, with publishing revenue declining by 8.5 percent and and circulation falling 3.7 percent.
However, shares have risen 4.87 percent on the news of the closure of the new paper, trading at 118.50 (0914GMT).
Rolls Royce show stability with statement
Rolls Royce defied expectations by confirming it was in line for its 2016 profit guidance, after issuing profit warnings three times in the past year.
The aeronautical engineering company had a troubled 2015, but expect to break even in the second six months of this year.
Analysts expect Rolls-Royce’s 2016 pretax profit to halve to 642 million pounds according to Thomson Reuters data, down from 1.36 billion in 2015.
Shares in Rolls Royce still fell over 5 percent on the news, currently down 5.-4percent at 612.50 (0917GMT).
05/05/2016