Stocks Jump As U.S.-China Trade Talks Finish; Greggs Rally On Tasty Results

Stocks Jump As U.S.-China Trade Talks Finish; Greggs Rally On Tasty Results

CMC Markets  | Jan 09, 2019 11:23

Stock markets have rallied after the US and China concluded their trade talks, and the meeting is said to have ended on a positive note. We await further details from both sides, but it sounds like the meeting went well, and it has boosted investor confidence. Some structural issues remain, and will need to be addressed at a later date, but for the time being, dealers are upbeat.

Sainsbury's (LON:SBRY) announced that total retail sales excluding fuel dropped by 0.4%, and like-for-like sales excluding fuel dropped by 1.1%. Grocery sales increased by 0.4%, and online grocery and convenience sales ticked up by 6% and 3% respectively. Clothing sales edged lower by 0.2%, and general merchandise sales fell by 2.3%. The group blamed a ‘cautious’ consumer environment and a deliberate decline in discounting ahead of Black Friday for the poor performance. Retailers are in a difficult position these days, discounting has become so prevalent, you fall behind if you don’t cut prices, but at the same time, promotions squeeze margins. The stock has been in decline since August, and if the bearish move continues it might target the 250p region.

Greggs (LON:GRG) posted solid figures and upped its forecast for year. The firm said that total sales increased by 7.2% and annual underlying profit before tax is expected to be at least £88 million, and that compares to the previous forecast of £86 million. The group finished 2018 on a high note, and started this year in a strong position. The share price hit an all-time high this morning and if the positive move continues it might target 1,500p.

Ted Baker (LON:TED) shares are in demand after the fashion house confirmed that retail sales in the five weeks until early January jumped by 12.2%. Online sales increased by 18.7% and now account for more than a quarter of total revenue. Margins are tipped to remain in line with expectations despite discounting. The stock has rallied for the past month, and if the bullish sentiment remains, it might target the 2,000p region.

EUR/USD has been helped by the dip in the US dollar. French consumer confidence fell from 92 to 87 – its lowest reading in over four years. Italian unemployment ticked down to 10.5%, from 10.6%. Eurozone unemployment fell to 7.9%, from 8%. The euro area continues to produce mixed economic updates.

GBP/USD has also been helped by the nudge lower in the greenback. Sterling’s range has been small recently as some traders await Parliament’s vote on Theresa May’s Brexit deal next week.

Bed Bath & Beyond Inc (NASDAQ:BBBY) will be in focus today as the company will release its third-quarter earnings. The company lost a quarter of its value in September, when the group revealed disappointing second-quarter figures. The retail sector has endured fierce pressure – price cuts and the rise of online shopping has been great for shoppers, but difficult for firms. The mood has shifted recently, as US house prices are cooling and consumer sentiment has dampened, and there is increased talk about a recession. Big-ticket items such as beds and baths are often the first to be affected when shoppers curtail their spending.

We are expecting the Dow Jones to open 68 points higher at 23,855 and we are calling the S&P 500 up 6 points at 2,580.

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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