Victoria Scholar, interactive investor's head of investment, runs through today's big stories and how financial markets are reacting.
European markets are trading modestly lower after hawkish comments from Federal Reserve officials sparked a jump in short-dated Treasury yields, and as US House Speaker Nancy Pelosi’s visit to Taiwan raises concerns about heightened tensions between Beijing and Washington.
Meanwhile earnings continue to attract investor attention with European banking heavyweights like Commerzbank AG (XETRA:CBK) and Societe Generale SA (EURONEXT:GLE) in the spotlight today. Plus, Avast (LSE:AVST) surges more than 40% after its tie-up with NortonLifeLock Inc (NASDAQ:NLOK) gets the green light from UK competition authorities.
Oil prices are trading lower so far this morning, with Brent crude hovering just shy of the key $100 a barrel level ahead of today’s OPEC+ meeting. Expectations are for the cartel to refrain from raising output, despite calls for a hike to help offset some of crude oil’s bullishness this year.
Yesterday, the API reported a surprise build for crude oil of 2.165 million barrels compared to an expected draw of 467,000 barrels, while OPEC+ cut its crude surplus estimate in the global market for this year.
Oil prices have pulled back from the March highs and, if OPEC+ defies expectations by boosting output at today’s meeting, both WTI and Brent crude will come under further pressure with the global benchmark heading back towards $95 a barrel and possibly below.
Ferrexpo (LSE:FXPO) reported a 44% drop in first half underlying EBITDA to $486 million while revenue slumped 31% to $936 million. First half profit after tax declined by 88% to $82 million as the Russia-Ukraine conflict created a major disturbance for the miner.
The Ukraine focused miner, Ferrexpo has been dealing with logistical problems since the onset of war, combined with lower production volumes and higher costs from the inflationary backdrop that have sharply reduced its profitability.
After a strong uptrend off the 2020 lows to the peak in May last year, the stock has since given back almost all those gains, with shares down around 70% from the highs with shares likely to continue to struggle if the geopolitical uncertainty endures.
Hugo Boss AG (XETRA:BOSS) reported a 40% jump in second quarter revenue year-on-year to 878 million euros, while EBIT more than doubled to 100 million euros. The German fashion brand now expects full-year sales to grow by between 20% and 25% to a record level of 3.3-3.5 billion euros.
CEO Daniel Grieder who has been at the helm since June 2021 has successfully implemented his new growth strategy called ‘Claim 5’, which has helped to strengthen its brand and revitalise top and bottom-line growth.
Despite the backdrop of cost inflation and a slowing economy, Hugo Boss has defied the odds, capturing the attention of the fickle fashion consumer, helping to lift shares by around 200% since the October 2020 trough.
The UK Competition and Markets Authority (CMA) has provisionally approved NortonLifeLock's $8.6 billion acquisition of London-listed cybersecurity rival Avast. It comes after the regulator launched an investigation into the purchase earlier this year amid concerns it could be detrimental to customers and to competition.
Shares in Avast have soared more than 40% this morning after the deal passed this major regulatory hurdle, paving the way for a tie-up that will create a major global force in the sector. When the UK launched the phase 2 investigation into the deal on competition grounds in March, it was believed that the CMA may not reach a conclusion until late 2022. This morning’s update comes as a huge relief to Avast investors with the transaction set to create a 500 million customer consumer security software heavyweight.
There has been a major surge in demand for cybersecurity protection products lately, with increased focus since the start of the conflict between Russia and Ukraine this year and with the huge shift towards flexible, remote working online post pandemic.
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