Earnings Season in Full Swing

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Wednesday, 17 July: Earnings season showed it was in full swing today, giving investors plenty to digest at the opening bell. The FTSE lost a ground early doors as a downbeat session on Wall St. was followed by mixed fortunes in Asia early on Wednesday morning. The weakness in sterling is also losing influence over domestic shares, with the risk of the UK crashing out sans deal looking more likely, it seems that the inverse relationship between the pound and FTSE is beginning to cool which in all fairness given the risks is justified.

Starting with the FTSE, it was Burberry who were top, continuing momentum after yesterday’s promising update. Miners enjoyed mixed fortunes, as BHP rose in contrast with Fresnillo’s shares that resided near the foot of the table. BHP has seen annual output flatline but they do forecast a return to growth for fiscal 2020. Fresnillo on the other hand has been forced to cut full year production guidance due to lower than expected grades at their Fresnillo mine and delays at another site. Shares finished 2.8% lower. Johnson Matthey’s latest update received a thumbs down from investors. Despite backing full-year guidance Q1 sales were flat, and they have said sales will be weighed more heavily towards the second half. The share price fall suggest many interested take the view of ‘course they will’. Another prime example of how thick the air is with caution. Returning to miners, Rio Tinto’s announcement that their copper mine in the Gobi Desert will take longer to complete sent shares higher during trade, but analysts point out that global copper shortages could get worse.

GVC have received a lot of coverage over the last 12 months. The online gaming platform provider and owner of Ladbrokes has shown that people are still gambling but the evidence from the FOBT hit is there to see. Shares on the day were down 1% but it was a solid update nonetheless, especially for operations outside the UK.

The UK’s leading watch retailer, Watches of Switzerland, that joined the stock market in June released their first update today. Pretax profit has fallen 70% but revenue was up on the year. The new year has begun encouragingly states the group. Shares climbed 1% today as investors eye a safer haven among UK retailers.

In April Galliford Try issued a profit warning, but today they seemed to have steadied the ship and have backed full year profit guidance. They have continued to benefit from solid trade and their Partnerships & Regeneration business achieve growth ahead of targets. The order book is currently £0.3bn lower than this time last year, shares finished 3.2% higher.

Hotel Chocolat has seen a jump in revenue of 14% and expects profit to be in line with market views. Shares received a modest 25 boost during the session. Their CEO cites innovation behind the rise in performance, they have had opening in the US and Japan and launched a in-home chocolate drinking system.

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