Traders hang on Trumps doubts Mixed start to earning season

The FTSE jumped on the open, lifted by positive global sentient and a bruised pound, however it edged lower across the day. In a rather dull European session, the pound was a more prominent mover, driving direction on the FTSE, whilst a mixed US open did little to inspire the UK index as it headed into the weekend.
The pound sunk, bounced and fell again in trading on Friday, with traders hanging onto Trump’s every word, whilst he was being wooed by Theresa May in the hope of a trade deal.

Trump Drives The Pound
Trump criticising Theresa May’s soft Brexit, which he believed probably killed off any hope of the UK-US bilateral trade deal was not well received by the pound. This was the exact fear that hard-line Brexit supports in the government had feared on the announcement of May’s softer Brexit stance and sent sterling tumbling overnight into this morning. Whilst trump made some effort to back track on his second day pushing the pound back towards break even, the fact that there is no clear promise of a trade deal any more has knocked confidence in the pound.

Any gains on the pound as Trump changed his tune were limited thanks to a more cautious sounding BoE Deputy Governor Jon Cunliffe placing doubts over whether the BoE will hike in 3 weeks’ time when they meet for the August MPC meeting. Whilst Q1 data was sluggish at best, there had been signs of a pick up in economic activity in Q2. Traders have had their doubts whether the pickup has been sufficient and in the eyes of Cunliffe, apparently not.
Wall Street has opened mixed on the final trading day of the week and the unofficial start of earning season, as the bulls and the bears battle it out over weaker economic data and a mixed bag of earnings.

Citigroup drops 2.5%
Whilst JP Morgan impressed investors with a year on year increase in earnings of 18% to $8.3 billion, just shy of the record Q1 $8.7 billion profit. Citigroup’s results were far from on par. Citigroup profits were comfortably above target at 1.63 EPS, but a 2% increase in revenue, thanks to a 20% decline in corporate lending over the year was more than a little disappointing for traders, sending the stock sharply lower. Whilst the profit side of the equation for Citigroup appears to be running well, a lot more attention will need to be paid to revenue generation if the bank wants a fighting chance of meeting financial targets set by Chief Executive Michael Corbat. This was not quite the start to earning season that traders were hoping for, limiting gains ahead of the weekend.

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