It’s been a broadly negative day for European markets with the FTSE100 outperforming after some positive earnings updates, as well as a buoyant energy and utilities sector, with the likes of BP, Shell and British Gas owner Centrica edging higher the way on the back of rising oil and gas prices.


The wider negative tone for markets, has been primarily driven by yesterday’s news from Gazprom, that it would be reducing gas flows from tomorrow to 20% of capacity, and the consequence of what that is likely to mean for the economic outlook for Europe as we head into the winter months.

The IMF also announced it was cutting its 2022 global GDP target to 3.2% from 3.6% in April, with the US being downgraded to 2.3% from 3.7%, and the UK downgraded from 3.7% to 3.2%. The fund also upgraded its inflation expectations. 

Catering company Compass Group is higher after reporting a big jump in Q3 revenues, driven largely by a 142.7% jump in revenues in its Sports and Leisure business. All regions showed a big improvement with North America leading the way.

Today’s H1 results were always likely to be a key test for Unilever CEO Alan Jope, in the wake of the misguided £50bn failed bid for GlaxoSmithKline’s consumer business earlier this year. Looking back now and given the current much lower valuation of Haleon Unilever can be considered to have dodged a very large bullet.

It is therefore good news that the company was able to report a 14.9% rise in revenues to €29.6bn, largely due to its ability to raise prices, with the shares rising to their highest levels this year, and finally drawing a line under the events of the first half of this year.

Costs have gone up and that has hit margins to a certain extent, but the effect has been minimal with underlying margins slipping 180bps to 17%.

Underlying sales during the first half rose by 8.1%, while underlying earnings per share rose by 1%, with the company raising its full year guidance for sales growth to above the previous range of 4.5% to 6.5%, with Q2 showing strong gains across all three business areas, Home Care, Foods and Refreshment and Beauty and Personal Care.  

Markets appear to have given a collective shrug to easyJet’s Q3 numbers today which have served to highlight the impact the various travel disruptions have had on its business over the last 3 months, and which saw the shares slide to 10-year lows earlier this month. Unlike Ryanair yesterday, the airline posted a headline loss before tax of £114m, with the impact of the recent disruption setting it back £133m.

The number of passengers flown rose to 22m, with 87% of 2019 capacity flown during the quarter, compared to 16% a year ago. This is expected to increase to 90% in Q4

Total group revenue for Q3 increased to £1.75bn, with ancillary revenues increasing to £603m as more passengers paid extra for items like speedy boarding and extra cabin bags. Costs were also higher rising to £1.87bn. Fuel costs for Q4 are 83% hedged, and 60% hedged for the first half of fiscal year 2023 at $784 per metric tonne. 

On the downside Kingfisher and Howden Joinery are lower after markets reacted negatively to today’s H1 numbers from DIY retailer Wickes.

A solid performance in Q2 like for like sales of 5.4% was enough to push H1 like for like sales up by 0.8%, however a cautious outlook appears to have pulled the rug out from underneath the share price. A slowing of new orders in recent weeks due to caution over customers taking longer to commit to big projects, has seen management target full year adjusted profit before tax to between £72m and £82m, down from last year’s £85m. 


US markets face a key session today, opening lower as the Fed meeting gets underway, as we look forward to the latest quarterly numbers from tech giants Microsoft and Alphabet after the bell.

On the data front US consumer confidence in July came in at 95.7, falling from 98.4 in June, while new home sales fell again, by -8.1%, while the May numbers were revised lower to 6.3%

Walmart shares are giving us a flavour of what to expect in the event of a miss tonight, with their shares sharply lower after the US retailer warned about its profits for Q2 and the rest of 2023. Operating margins for Q2 have been revised lower to 4.2% and below 4% for the rest of the year, although sales are expected to be higher, 7.5% for Q2 and 4.5% for the rest of the year. Walmart said that spending on food and energy was now making up a much higher proportion of basket spend, leaving less money for higher value and margin items.

On the other hand, UPS has seen its revenues rise sharply, benefitting from being able to pass on price increases as it posted Q2 revenues of $24.77bn, while reiterating its full year guidance of $102bn. Profits beat expectations, coming in at $3.25c a share, helped by a 12% increase in revenue per package. This helped offset a miss in overall volumes, which suggests that demand might be slowing, and it is this that appears to be weighing on the shares in early trade.    

Coinbase shares are also lower on a report that the company is facing an SEC investigation on its cryptocurrency listings, and whether they should have been listed as securities.

Earlier this month Microsoft downgraded its Q4 revenue guidance from $52.4bn to $51.94bn, citing the effects of a stronger US dollar, on what would still be a record number.  Investors will be looking specifically at its cloud business which has been a key revenue driver the past two years, and where it also competes with Google owner Alphabet.

Similarly, Alphabet could face pressure from a drop in advertising across all its platforms, including YouTube. Investors will also be looking for evidence of growth in its own cloud business.

Amazon shares are also in focus ahead of their earnings numbers later this week after announcing an increase in UK Prime prices to £95 a year from £79, and £8.99 a month, from £7.99. This would be the first increase since 2014 but is still evidence that companies are feeling the effects of higher input costs. It’s also going to shine a harsher light on the competitive nature of the streaming market. 


The US dollar is holding its own as we get set for tomorrow’s eagerly anticipated Fed rate decision, with the general risk-off nature of today’s market price action, prompting some haven flows. 

It’s been another negative day for the euro, on the 10th anniversary of former ECB President Mario Draghi’s now famous “Whatever it Takes” speech, and while that speech still resonates, it remains indicative of the challenges facing the single currency, none of which have been addressed. The euro remains under huge amounts of pressure, well below the levels it was when Draghi made that speech and languishing close to 20-year lows, after Gazprom announced it would be reducing gas flows further from tomorrow to 20% of capacity, pushing European gas prices up sharply.

With no clear timeline for when capacity is likely to increase it is becoming ever clearer that Putin is toying with Europe in the same way a cat toys with a mouse. This is unlikely to change in the medium term, making the outlook for Europe’s economy even more uncertain heading into winter. Good luck raising rates against that sort of backdrop.

The pound has fared a little better despite UK natural gas prices spiking to four-month highs, sliding briefly below the 1.2000 area.


Crude oil prices between the US and Brent have diverged over the last few days, with Brent prices coming across as much more resilient than its US counterpart which is still below $100 a barrel. While this is good news for US consumers, it’s not so much for the rest of us.

In a double whammy for European and UK consumers, natural gas prices are also higher on the back of the reduction in flows through Nord Stream 1.

Copper prices are also back on the rise again as concerns about supply help to put a floor under recent declines. Weaker demand has prompted some mining companies to cut their production outlook for this year, and that, along with a weaker US dollar has helped put a floor under a decline that has seen prices drop 20% year to date.


Lumber prices fell for a sixth consecutive session on Monday, but a somewhat erratic start to the day’s trade was sufficient to see a spike in volatility. The underlying is threatening a test of levels not seen in almost a year and the commodity is evidently something of an outlier in the building sector where prices of other materials broadly continue to trend higher. Daily vol printed 166% against 151% on the month.

Crypto prices continue to ease, although price action in Ethereum Classic remains moderately elevated. The underlying here has fallen back by more than 15% from the weekend’s highs and after the significant run higher at the start of the month, there’s no shortage of questions as to just how marked any sell off could be. Daily vol remains in triple figures, coming in at 109% against 104% on the month.

Finally, Chinese e-commerce stocks found support at the start of the week amidst optimism that the economy may be rebounding following the COVID-driven contraction seen of late. That has been played out in CMC’s proprietary basket of China tech stocks, which finished Monday ahead after a turbulent start to the week. Daily vol came in at 62.67% against 59.93% on the week.

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