Market overview, Lean Cooperman and Asos earnings | Calamatta Cuschieri

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Wednesday’s publication of Asos’s final results reveals profit increases
Wednesday’s publication of Asos’s final results reveals profit increases

Market overview

European stocks finished the day lower after U.S. equities turned red led by declines in technology and communication-services names. The pan-European Stoxx Europe 600 closed down 0.5% to 361.67, Germany’s DAX 30 slid 1.07% to 11,589.21. France’s CAC 40 slipped 0.6% to close at 5,116.79. U.K.’s FTSE 100 was off 0.39% at 7,026.99, as Brexit worries continued to influence trade.

U.S. stocks closed sharply lower Thursday as fears of a slowdown in global growth and higher bond yields continued to dampen appetite for risk assets. The Dow Jones Industrial Average dropped 1.3% to end at 25,379.45 and the S&P 500 index shed 1.4% to 2,768.78. The Nasdaq Composite Index slid 2.1% to 7,485.14.

A breakthrough in Brexit negotiations is set to stall once again as U.K. Prime Minister Theresa May proposed that the UK’s transition out of the EU be extended by “a matter of months”. The pound to euro exchange rates have decreased by -0.20% by the time of reporting.

The European Commission is yet to officially respond to Italy’s populist government’s budget which is causing uncertainty to continue moving the nation’s sovereign bond yields surprisingly upwards which is seen by analysts as a rush to buy the sovereign bond before the EU give their response to the budget and the arrival of two potential credit rating decisions.

Billionaire investor Cooperman gives his views

Hedge-fund manager Leon Cooperman in an interview with CNBC argued that stocks are “fundamentally cheap” following a U.S. led global equity retreat last week. The declines in American indices along with rises in U.S. treasury yields have led many investors to believe that a growth slowdown is around the corner. Cooperman, also the founder of Omerga Advisors, argued that the economy, “if anything, is too strong” and that the conditions “that normally lead to a big decline just aren’t present”

Asos profits increase through animal print and plus size clothing

The online fashion retailer sold 1.3 million animal print garments offering 2,000 options during the financial period ending 31 August 2018. The company reported revenues of £2.4bn for the year to 31 August, with profits rising 28% to a better than expected £102m (source: BBC). Shares have increased 15% following the news but is still down by around 10% this year.

During its financial year, Asos have claimed to have added 5,000 new items to its website every week, with around 87,000 products in stock at any point in time. Sales of inclusive fit sizes, from smaller to larger also increased by 37% (source: BBC). Despite the sales increase and rise in share price, which are two positive events for the company, Richard Hunter at Interactive Investor said: “Of slight concern is the fact that Asos will need to maintain this breakneck speed of growth to continue justifying its lofty valuation, as evidenced in the July update when the shares were hit after slightly weaker than expected sales.”

 

Disclaimer: This article was issued by Nadiia Grech, junior trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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