The negative sentiment in Asia spilled over to Europe. Ratings agency Moody’s, downgraded Hong Kong’s rating to Aa3 from Aa2, hence why the Hang Seng underperformed. Investment sentiment in mainland China was impacted too. Fears of a new coronavirus in China are doing the rounds, and that hasn’t helped investor confidence either. The IMF’s lowering of its global growth forecast yesterday is playing on traders’ minds still. There hasn’t been one story that has driven the narrative this morning, but a mixture of a few negative reports has influenced the markets.
The Dixons Carphone (LON:DC) share price are in demand this morning following the trading update covering the 10 weeks until early January. The performance in the crucial shopping period wasn’t anything special, but the company maintained its full-year-guidance, and that was enough to spur on the bulls. Electrical sales in the UK and Ireland on a like-for-like (LFL) increased by 2%, but mobile revenue dropped by 9%. The international business on a LFL basis posted a 3% rise in revenue. The group revealed a painful profit warning in June, and it was the mobile division that did the damage, so seeing as today’s overall update was alright, it has given traders some assurance about the group.
EastJet said their first-half loss would fall from the £275 million posted in the same period last year. In the first-three months the revenue per passenger metric increased by 9.7%, while the ancillary revenues jumped by 10.8%. Like Ryanair and Wizz Air, easyJet (LON:EZJ) is boosting the revenue it derives from ancillary services, which is a shrewd move seeing as the air fares price war can be intense. The group benefited from Thomas Cook exiting the market as customers sought out a reliable air carrier.
UBS shares are lower this morning after the company posted largely disappointing figures. The return on common equity tier 1 (CET1) capital was 12.4%, while the target was 15%. The adjusted cost-income ratio was 78.9, missing the target of 77%. Banks across the board have been trying to earn more money from services like wealth management as a way of making themselves less dependent on activities such as trading, but UBS’s wealth management operation saw outflows of $4.7 billion.
GBP/USD was given a nice boost by the latest UK jobs data. The unemployment rate held steady at 3.8%, meeting forecasts, while the average earnings metric excluding bonuses cooled from 3.5% to 3.4% - meeting forecasts. The figures were respectable so it adds weights to the argument the Bank of England shouldn’t cut rates later this month.
EUR/USD was given a lift by the much-better-than-expected German ZEW economic sentiment report. The reading jumped to 26.7 from 10.7, which provided a nice boost to the euro.
Netflix (NASDAQ:NFLX) might see some volatility in today’s trading session as the company will release its fourth-quarter figures after the market is closed. Competition in the streaming services industry is heating up thanks to the launch of Apple (NASDAQ:AAPL) TV+ as well as Disney+, so traders will be paying close attention to the number of new customers that were added. Now the market is opening up, this will be the acid test for Netflix as their dominance will be easier to challenge.
We are expecting the Dow Jones to open 108 points lower at 29,240 and we are calling the S&P 500 down 17 points at 3,312.
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