Firstly, a quick review of last week’s trading business. We were at Finance Magnates last week, one of the key industry conferences for futures, options and forex trading. Hosted in the heart of the City of London, the event is always a great way to gauge the health of the broking end of the market.
It was busier than ever, with particular stress on cryptocurrencies, ICOs and the general rise in trading digital currencies of one kind or another. But really, don’t we have enough cryptocurrencies on the market already? One source said he knew of over 60. Do we honestly think the world needs that many?
There’ve been some pretty big political changes on the world stage, including the forced retirement of Zimbabwe dictator Robert Mugabe, but what about those Norwegians?
Norway’s sovereign wealth fund said it would be dumping its investments in oil and gas companies, but Norway is still a major oil and gas producing country. How does it justify this?
The market reckons it signals Norway is losing faith in Big Oil and it could well be right. We saw several European energy stocks get slapped last week on the news. The decision still requires government approval, and it is not a foregone conclusion.
Moving on to UK stocks, we have EasyJet’s new CEO Johan Lundgren starting his new job as on 1 December. Before he gets his feet under the desk the airline will be reporting its full year figures and they are likely to be making interesting reading. We’ve seen terror attacks, we’ve seen own goals from other airlines over their IT infrastructure, and we’ve seen a number of high profile bankruptcies in the airline sector. Monarch? Air Berlin? Alitalia? All sent to the dustbin of history folks.
EasyJet had a pretty good October trading statement. Pre-tax profit forecasts were around £410 million with lower fuel costs helping to the tune of £230 million. City analysts reckon we’ll see a mid-teens percentage increase in pre-tax profit, to around £470 million.
Currencies are still a drag for EasyJet as they are for anyone being paid mainly in sterling. EasyJet could cough up some profit here. Rising oil costs will be hedged out for the time being.
Also under the microscope this week will be Kingfisher. We’ve had a look at this on The Armchair Trader recently. We said it was still worth hanging on to Kingfisher stock, despite rumours abounding that the company might be tempted to spin off a few of its more profitable units. There are also well-founded investor worries that a slowdown in the UK housing market could damage some of its prime brands, like Screwfix.
We have a third quarter trading statement coming from Kingfisher on Tuesday. The update will give like-for-like sales growth. The first half of this year was disappointing for Kingfisher, with sales falling in each of the first two quarters. Kingfisher has DIY chains in both the UK and France, and it is the numbers from the French shops, like Castorama and Brico Depot, that look the most horrendous. Sales have seen year-on-year drops five years running.
Veronique Laury, Kingfisher’s CEO, says bad weather in the UK – shocker – has been hitting B&Q. But there is more to this than just another summer barbecue getting rained off – Kingfisher has been looking to move toward supplying unified products rather than regionally adapted ones. Availability is now meant to be approaching normal levels, but these results will show us exactly how well this process has been progressing.
The Autumn Budget
On Wednesday we’ll get an autumn budget. For share traders the sectors to watch out for are house builders and defence. It will also be interesting to see if the Chancellor will roll back on his predecessor’s commitment to cut corporation tax to 17% in April 2020.
The pound is still in a whole world of trouble, and Hammond also has UK government bond yields to worry about. The government forecast that UK inflation would be 2.4% in 2017, but we think they’re dreaming.
Other trading statements coming out this week include bookmaker William Hill and Smiths Group, and we’ve got full year results coming from Compass and interim results from Babcock, AO World and Telecom Plus. All on Tuesday.
If you are interested in macro numbers, we have an ECB Financial Stability Report on Tuesday and US existing homes sales.
Don’t forget that US markets will be closed for the day on Thursday for Thanksgiving and that this will be followed by the usual Black Friday shopping mania.