What to Watch: ECB meets, Diageo results, Nissan jobs

Edmund Heaphy
Finance and news reporter
Outgoing European Central Ban president Mario Draghi in March. Photo: Thomas Lohnes/Getty Images

The European Central Bank meets

The governing council of the European Central Bank holds its latest policy meeting on Thursday, with analysts predicting it will keep policy on hold until its next meeting in September.

The bank’s policymakers have been increasingly signalling they will loosen euro zone monetary policy before the end of the year, with inflation still way below target and data suggesting the bloc is experiencing a downturn.

The euro hit a two-month low on Wednesday following particularly weak manufacturing figures from Germany.

“If the ECB focuses on German manufacturing PMIs, it will cut rates; we think it’ll wait for September,” Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said in a note.

In any case, outgoing ECB chief Mario Draghi is expected to signal that a rate cut is coming — and lay the groundwork for the resumption of its asset-buying programme.

Profits jumped 9.5% at Diageo

British drinks giant Diageo (DGE.L) on Thursday said its full-year operating profits increased 9.5% to £4bn, with net sales increasing 5.8% to £12.9bn.

“Diageo has delivered another year of strong performance. Organic volume and net sales growth was broad based across regions and categories, with new product innovation being a strong contributor,” CEO Ivan Menezes said.

Though it makes up only 4% of overall revenue for the company, gin was a standout performer, with sales jumping 22%.

Diageo’s results come as the company on Wednesday failed to reach a pay deal with Scottish unions, something that threatens to disrupt the production of whiskies such as Johnnie Walker, Black & White, and Lagavulin.

Whisky sales at Diageo climbed by 6% in 2019.

The company has 29 distilleries in Scotland. Unite, the union, said 500 of its workers at Diageo would begin voting next week on industrial action, warning proposed “discontinuous strike action” could run from late August to November.

Nissan announces global job losses

Troubled Japanese carmaker Nissan (NSANY) said on Thursday that its first-quarter profits plunged by 98.5% to 1.6bn yen (£11.9m), with the company pointing to difficulties in the North American car market.

Nissan said it would be forced to cut up to 12,500 jobs globally by 2022. However, union sources hope the company’s UK workforce, which is primarily based at its Sunderland plant, will not be majorly impacted.

Nissan had already planned to cut up 4,800 jobs from its global workforce, which currently numbers at around 139,000.

The company is recovering from the scandal surrounding ousted chairman Carlos Ghosn, who is awaiting trial in Japan on chargers of massively under-reporting his salary and using company money for personal expenses.

European stocks in the green

European stocks gained on Thursday. The FTSE 100 (^FTSE) climbed by 0.19%, while Germany’s DAX (^GDAXI) was up by 0.30%. France’s CAC 40 (^FCHI) was up by 0.77%.

This followed a strong trading session in Asia. The Nikkei 225 (^N225) was up by 0.22%, and the SSE Composite (000001.SS) was up by 0.38%. The Hang Seng (^HSI) was up by 0.32%.

Sterling was down 0.05% against the dollar (GBPUSD=X) on Thursday, to around $1.247, and up 0.06% against the euro (GBPEUR=X), to around €1.12.

What to expect in the US

Futures are pointing to a mixed opening for US stocks.

S&P 500 futures (ES=F) are up by 0.09% and Dow Jones Industrial Average futures (YM=F) are up 0.23%. Nasdaq futures (NQ=F) are up down by 0.16%.

Companies reporting later on Thursday in the US include:

  • Google parent Alphabet (GOOGL)

  • Amazon (AMZN)

  • Southwest Airlines (LUV)

  • American Airlines (AAL)

  • Intel (INTC)

  • Starbucks (SBUX)