Equity markets are largely mixed as the sentiment has turned around somewhat.
Europe
Earlier in the session, the markets were firmly in the red but then they started a come-back, and it looks as if some of the equity benchmarks are going to finish higher this afternoon. The health crisis is getting worse, but markets don’t move in straight lines, so at some point there was going to be a switch in sentiment, and that’s what we are seeing today.
Metro Bank (LON:MTRO) shares saw major volatility today. The bank posted a 1% slip in revenue to just over £400 million, while the statutory loss was £130.8 million, and that was a big difference from the £40.8 million profit registered last year. The troubled bank had to sell-off a loan book of £521 million earlier in the year. The net interest margin rate dropped to 1.51% from 1.81%, but Metro cited the loan book sales as well as higher deposit costs for the weaker lending margin. In light of the depressed interest rate environment, the bank is likely find the lending business tough in the quarters ahead. In a bid to keep an eye on its costs, the firm said it will scale back its expansion plans. The stock is in the red, but it is well off the lows of the session.
Diageo (LON:DGE) shares are in the red today after the company warned of ‘significant disruption’ on the back health emergency in China. The country in question is of major importance to the group in term of logistics as well as sales. Drinks such as Johnnie Walker whisky has become popular with middle-income consumers in recent years, but now the London-listed firm feels that annual sales could be hurt by £225-£325million.
The proposed tie-up between the London Stock Exchange (LSE) and the Refinitiv could face severe scrutiny. What’s called the pre-notification period seems to be lasting longer than normal, which often indicates a more thorough review by regulators. Initially traders felt the deal was likely to get approved without any major hurdles, but now dealers are starting to get a little nervous about the planned deal.
The Restaurant Group confirmed plans to close up to 90 sites as a part of its cost cutting plan. Consumer confidence in the UK hasn’t been great recently, and the high street is suffering. The firm took over Wagamama in recent years, which has been a success, and a number of its existing sites will be converted into Wagamama outlets.
It has been a tough day for the UK job market as Lloyds (LON:LLOY), Ted Baker (LON:TED), as well as Direct Line, announced cuts.
US
The mood on Wall Street has turned optimistic and traders are buying back into equities in the wake of major losses earlier this week. The solid US new homes sales was a pleasant reminder there are positive aspects to the US economy, as the reading came in at 764,00, which smashed the 710,000 forecast.
TJX Companies (NYSE:TJX) shares are up more than 8% as same store sales topped forecasts. The group confirmed that fourth-quarter comparable sales increased by 6%, which comfortably topped the 3.03% forecast. Net sales in the three month period jumped by 10%, and the company predicts that full-year same store sales will increase by 2-3%.The company revealed plans to hike the dividend by 13%, and it intends to buyback between $1.75 billion and $2.25 billion worth of shares. The stock hit a record-high today, which underlines the bullish sentiment.
Lowe’s (NYSE:LOW) had mixed quarterly results, hence why the stock in a little lower today. For the fourth-quarter, EPS came in at 94 cents while the consensus estimate was 91cents. Revenue for the period was $16.03 billion and that was a touch below forecasts. Same store sales grew by 2.5%, but equity analysts were expecting 3.6% growth. The company is keen to increase its online sales as well as become more popular with building contractors.
FX
The robust housing data helped the US dollar index, and in turn it put pressure on EUR/USD as well as GBP/USD. Sterling seems to be weak across the board even though there have been no major economic reports from the UK. The Budget next month will be in focus as there is chatter of a spending spree in the pipeline. Traders are also thinking about the UK-EU’s relationship post the transition period as tough talk is likely to be on the cards as neither side will not want to appear weak, so that could weigh on the pound.
Commodities
Gold is lower as traders are banking their profits from the metal’s recent rally, and are buying back into stocks. The move witnessed today is a classic example of risk-on behaviour, as the previously sought-out safe-haven of gold is now being dumped for riskier assets. Despite today’s move, the wider bullish trend is still in play.
WTI and Brent crude are mixed as the energies have been pulled off the lows of the day by the rebound in stocks. The oil market is closely tied in with the perceptions about global growth so it suffered greatly this week, but now we are seeing a snap back. The US oil inventory report showed a build of 452,000 barrels, while the consensus estimate was for an increase of 2.6 million barrels.
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