Marks & Spencer, Trading Conditions Challenging

Retailer Marks & Spencer Group Plc (MAKSY.PK, MAKSF.PK, MKS.L) reported Wednesday that its first-half profit before tax increased 7.1 percent to 126.7 million pounds from 118.3 million pounds last year.

Profit after tax was 89.8 million pounds, up 6.1 percent from 84.6 million pounds a year ago. Basic earnings per share were 5.4 pence, up 3.8 percent from 5.2 pence last year.

Adjusted profit before tax was 223.5 million pounds, compared to 219.1 million pounds a year earlier. Basic adjusted earnings per share were 10.6 pence, compared to 10.7 pence last year.

Group revenue dropped 3.1 percent to 4.97 billion pounds from 5.13 billion euros a year ago.

Clothing & Home revenue was down 2.7% impacted by store closures, with like-for-like sales down 1.1%. Online Clothing sales growth was ahead of market.

Food revenue was down 0.2% with like-for-like revenue down 2.9% reflecting tough trading.

Looking ahead, for fiscal 2019, the company said trading conditions remain challenging and the headwinds from the growth of online competition and the march of the discounters remain strong in all markets.

In Clothing & Home, the company now expects a space reduction of c.4% as at year end, compared to previously expected 5%.

Modest Gains In Asian Markets

Asian stock markets are mostly higher on Wednesday following the positive cues overnight from Wall Street. However, gains are modest in most markets as investors awaited the results of the U.S. midterm elections.

The elections will decide control of both the House and the Senate and could have a major impact on President Donald Trump’s ability to enact his pro-business agenda. U.S. stock futures rose amid indications that Republicans have a chance of taking not only the House, but also the Senate.

The Australian market is declining despite the positive cues from Wall Street as weak commodity prices dragged resources stocks lower, offsetting gains by banks. Investors are also cautious as they await the outcome of the U.S. midterm elections.

The benchmark S&P/ASX 200 Index is declining 20.20 points or 0.34 percent to 5,855.00, after touching a low of 5,844.60 earlier. The broader All Ordinaries Index is down 19.70 points or 0.33 percent to 5,939.00. Australian stocks also ended notably higher on Tuesday.

Among the major miners, BHP and Fortescue Metals are declining more than 1 percent each, while Rio Tinto is down 0.7 percent.

Oil stocks are also weak after crude oil prices fell for a seventh straight session overnight. Santos is losing 1 percent, while Woodside Petroleum and Oil Search are down almost 1 percent each.

Gold miners are mixed after gold prices declined overnight. Newcrest Mining is lower by 0.7 percent while Evolution Mining is rising almost 2 percent.

Meanwhile, the big four banks are advancing. National Australia Bank, ANZ Banking and Westpac are higher in a range of 0.2 percent to 1.2 percent.

Commonwealth Bank reported a 4.8 percent decline in full-year profit, hit by more than A$1 billion in anti-money laundering fines, customer remediation and royal commission costs. However, the bank’s shares are rising 0.5 percent.

Bega Cheese said it plans to vote in favor of selling its 15.6 percent stake in Capilano Honey to a China-focused consortium. The company’s shares are declining more than 1 percent.

Kogan.com has signed a deal to distribute a March & McLennan-owned Mercer product under the Kogan brand, signalling its entry into Australia’s A$2.7 trillion superannuation industry. However, the online retailer’s shares are losing almost 4 percent.

On the economic front, Australia will see October results for the Performance of Construction Index from the Australian Industry Group today.

In the currency market, the Australian dollar rose to a five-day high against the U.S. dollar on Wednesday. The local currency was quoted at $0.7236, up from $0.7216 on Tuesday.

The Japanese market is extending gains from the previous session following the positive lead from Wall Street and on a weaker yen. Investors are now looking ahead to the outcome of the U.S. midterm elections.

The benchmark Nikkei 225 Index is advancing 179.99 points or 0.81 percent to 22,327.74, after rising to a high of 22,380.87 in early trades. Japanese shares showed a strong move to the upside on Tuesday.

The major exporters are mostly higher as the yen weakened. Panasonic is rising more than 1 percent, Mitsubishi Electric is adding 0.2 percent and Sony is edging up 0.1 percent, while Canon is down 0.4 percent.

In the tech sector, Advantest is gaining almost 2 percent, while Tokyo Electron is down 0.5 percent.

Among auto makers, Toyota is rising almost 2 percent after recording a 28 percent in profit for the September quarter and raising its full-year outlook, while Honda is lower by almost 1 percent.

In the banking sector, Sumitomo Mitsui Financial is higher by 0.5 percent and Mitsubishi UFJ Financial is advancing almost 1 percent.

In the oil space, Japan Petroleum is losing more than 1 percent and Inpex is down 0.2 percent after crude oil prices fell for a seventh straight session overnight.

Among the other major gainers, Nichirei, Yokogawa Electric and Dena Co. are gaining more than 8 percent each, while Nippon Telegraph & Telephone is rising almost 6 percent.

On the flip side, Takara Holdings is losing almost 9 percent, Mitsubishi Materials is lower by more than 8 percent and Daikin Industries is down almost 5 percent.

In economic news, Japan will see preliminary September results for its leading and coincident indexes as well as September results for real and labor cash earnings.

In the currency market, the U.S. dollar is trading in the upper 113 yen-range on Wednesday.

Elsewhere in Asia, South Korea, Singapore, Hong Kong, Taiwan, Indonesia and Malaysia are also modestly higher, while Shanghai and New Zealand are edging lower.

On Wall Street, stocks closed higher on Tuesday, continuing to recover from the sell-off seen in October. However, traders seemed reluctant to make more significant moves amid uncertainty about the outcome of today’s highly anticipated midterm elections and as they looked ahead to the Federal Reserve’s monetary policy announcement due on Thursday.

The Dow advanced 173.31 points or 0.7 percent to 25,635.01, the Nasdaq climbed 47.11 points or 0.6 percent to 7,375.96 and the S&P 500 rose 17.14 points or 0.6 percent to 2,755.45.

The major European markets moved to the downside on Tuesday. While the German DAX Index edged down by 0.1 percent, the French CAC 40 Index fell by 0.5 percent and the U.K.’s FTSE 100 Index slid by 0.9 percent.

Crude oil prices drifted lower on Tuesday, extending their slide to a seventh successive session. WTI crude for December lost $0.89 or 1.4 percent to close at $62.21 a barrel on the New York Mercantile Exchange.

Second-biggest producer in Opec to lift output

Iraq plans to increase its oil output and export capacity in 2019, with a focus on its southern oilfields, and is close to reaching a deal with international companies, Oil Minister Thamer Ghadhban has said.

The new minister also said the shortfall in oil supply caused by new US sanctions on Iran had yet to be gauged before Iraq and other Opec members could decide what action to take ahead of their policy meeting next month.

Iraq, Opec’s second-largest producer, is targeting production capacity of 5 million barrels per day (bpd) in 2019, with average exports expected to reach around 3.8 million bpd.

Iraq currently pumps around 4.6 million bpd, second only to Saudi Arabia in the Organisation of the Petroleum Exporting Countries. The bulk of Iraq’s oil is exported via its southern terminals, which account for more than 95pc of state revenue.

Upgrading capacity, especially in the south, “is a top priority,” Mr Ghadhban told Reuters in his first interview since taking over at the ministry last month. “We have had talks with international companies which lasted for a while, but now we are about to reach a deal and will settle this issue soon,” he said.

In the coming years, Iraq plans to boost export capacity to 8.5 million bpd after upgrading its infrastructure, Mr Ghadhban said.

This would include 6.5 million bpd from southern oilfields, with 1 million bpd to become available after a new pipeline from the northern city of Kirkuk to Turkey’s Ceyhan port on the Mediterranean is built.

The country is trying to recover from years of violence, including a war with Islamic State militants, that wrecked infrastructure. Baghdad is also seeking to reduce corruption and manage rivalries with the Kurdish authorities who run oil-rich areas in the north.

Mr Ghadhban, who replaced Jabar al-Luaibi as minister, is also looking to diversify Iraq’s export outlets through new pipelines.

One of Iraq’s immediate challenges will be to gauge the shortfall in global oil supply caused by sanctions Washington reimposed on Iran’s oil sector on Monday.

Ghadhban said Iraq wanted to see the “actual decrease” before Baghdad and other Opec members decide how to deal with a reduction in Iranian shipments.

Mr Ghadhban did not specify what oil price he expected for 2019. He said a price above $70 per barrel was “fair” and that the higher the price, the better it was for Iraq.

“I compare it with previous prices … when we talk about prices above 70 … I say it’s a fair price, it’s not 30 or 50 and it’s not 100.

“In principle, the higher the price, the better for Iraq. But we’re not working alone .. we’re a member of Opec. We see the interests of consumers and we want to be a viable producer and exporter,” Mr Ghadhban said.