Wednesday, July 10: European equities were largely subdued, though auto manufacturers and engineers weighed the DAX 30 lower than its European counterparts. UK equities were narrowly lower at the open, but a positive GDP read for May did little to enthuse investors’ appetite for stocks, especially with US Federal Reserve Chair Jerome Powell’s testimony due later today. An interest rate cut was seemingly shelved due to strong US employment data last week(+224K jobs in June), but markets will try to tease out further clues as to the Fed funds rate path progression tonight.
Wetherspoons(+3.46%) closed out the day in the green following the issuance of its pre-close trading update for the financial year ending 28 July. For the 10 weeks to 7 July 2019 LFL sales increased by 6.9% and total sales increased by 6.6%. Year-to-date LFL sales increased by 6.7% and total sales increased by 7.4%. Since the start of the year the company opened five new pubs whilst disposing of nine, though no new openings are slated for the current financial year. Net debt at the end of this financial year is expected to be £745m, with £71m spent on buying the freehold of pubs and £5.4m used for share buy back purposes. Tim Martin guided on unchanged expectations for the current financial year, among other Brexit-related ramblings.
Data was indicative of UK GDP growth of 0.3% in May over April(-0.4%), though sterling was unmoved on the news. Growth emerged from IT, Communications and retail sectors, though the long term decline in services continued with a flat performance. Manufacturing activity picked up in May as car production was re-initiated, though the sector remains under pressure given inventory run-down and tough global trading conditions.
European equities were lower at the close, with the FTSE 100 -0.08%, the CAC 40 -0.08% and the DAX 30 -0.51%.