The FTSE’s has dropped 30 points in early trading as the commodity sector weighed heavily with Anglo American and Rio Tinto down more than 1.5%.
Beyond the mining sector, it was BT holding back the index with a drop of 3% in early trading. This is due to a 42% plunge in first quarter pre-tax profit following a one-off payment of £225 million to two shareholders following the Italian accounting scandal that came to light earlier this year.
Other corporate news includes Barclays missing its forecast estimates with a first half loss of £1.4bn, attributed primarily to their exit from Africa and a further £700m PPI provision. Meanwhile, it’s peers BNP, UBS and Credit Suisse have all surpassed expectations with their earnings announcements this morning.
Over in the Eurozone the DAX and CAC continued to suffer from the strength of the euro. The German index fell half a percent while the CAC dropped nearly 1%, despite a strong French Q2 GDP reading.
At the end of the week, the dollar remains very much in focus. The release of the US Gross Domestic Product figures today will dictate the price action leading up to next week’s Non-Farm Payrolls report.
ADS Securities Analyst, Konstantinos Anthis suggested “If we see a strong GDP figure today this should help the US currency trade with a steady bias during next week, but another miss in the numbers will undoubtedly cast further doubts on the performance of the US economy.”
“Analysts are expecting a strong printing for the GDP figures but weaker spending in the previous months is leading to increased doubts over how strong the number will be – if the market is disappointed there is a risk the dollar could end the week even lower.”
US equity markets finished mixed yesterday as a strong initial opening reversed, led by yet another Tech sell-off. Accendo Markets Analyst, Mike van Dulken commented “Weakness in the sector was highlighted by the Nasdaq falling 0.6%, however the S&P500 also suffered, closing 0.1% lower.”
“Online retailer Amazon fell 3% in after-market trading as the company’s earnings per share missed estimates by almost 50%, a performance blamed on high investment.
“The Dow Jones bucked the trend, finishing positive and at another fresh record closing high as Verizon closed 7% higher and Boeing extended its post-results rally.”
US companies reporting today include Dow oil components Chevron and ExxonMobil, major US carrier American Airlines, pharmaceutical giant Merck and tyre manufacturer Goodyear.