European equity markets are higher this morning following the impressive rally in Asia overnight. Stock markets in China surged over 4% and some of the bullish sentiment has spilled over to Europe.
Dealers are cautiously optimistic as questions still hang over Italy’s financial health. Moody’s have downgraded Italy’s credit rating to one notch above junk status, but the agency lifted its outlook to stable from negative, so investors aren’t afraid of another downgrade in the near-term. The showdown between Rome and Brussels continues, and just because the FTSE MIB has bounced back this morning, doesn’t mean that long-term confidence has been recovered.
Ryanair (LON:RYA) shares are in demand despite the airline posting a 7% fall in first-half profits. Revenue and passenger numbers grew by 8% and 6% respectively, as it seems that’s the company’s aggressive airfare slashing tactic worked. Industrial action, higher fuels costs and compensation for missed flights hurt the company’s bottom line. The firm revealed a €540 million share buyback scheme, and that should help keep shareholders sweet, but ultimately the group needs to boost its customer and staff relations.
The stock has been in a downward trend for over one year, and while it remains below the 50-day moving average at 1,292p, its outlook could remain negative.
Mining stocks like Glencore (LON:GLEN), Rio Tinto (LON:RIO) and Anglo American (LON:AAL) are higher this morning due to the positive move in copper and platinum. The metals have been showing signs of recovering recently, and should that be the case, we could see further upside for mining companies.
Provident Financial (LON:PFG) shares are in the red after Barclays (LON:BARC) cut its share price to 753p, from 770p. The stock endured a severe sell-off last year, and the share price has been range bound since August 2017.
EUR/USD and GBP/USD are a little higher this morning thanks to the slight dip in the US dollar. The greenback enjoyed a rally last week but has since cooled, but given the chatter about the US potentially hiking interest rates further, demand for the greenback could remain firm. We are not expecting any major economic announcements today, so volatility might remain low.
We are expecting the Dow Jones to open 26 points higher at 25,470 and we are calling the S&P 500 up 2 points at 2,769.
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