Stock markets in Europe are higher this morning on the back of charter that Germany will announce a stimulus package, and that China are looking into reforming their lending system. Olaf Scholz, Germany’s finance minister, hinted the German government could earmark $50 billion for a stimulus package, and that has helped lift sentiment. Germany is the largest economy in Europe, and admittedly, a $50 billion stimulus package isn’t huge for an economy of that size, but the very fact the country is contemplating such a move says a lot, and it has acted as a green light to the bulls.
Over the weekend, the People’s Bank of China announced it will introduce reforms to ‘help lower real lending rates’. China’s economy has been cooling ,and Beijing are keen to reduce lending costs for companies and the belief is that firms will be encouraged to borrow more and in turn spend more as a result. The wider concerns about the state of US-China trade relations, unrest in Hong Kong, and the prospect of a no-deal Brexit are still in lingering, but in the near-term, the hopes of stimulus from Germany and reforms in China are boosting stocks.
Mitie Group (LON:MTO) will sell-off its catering business for up to £85 million, and the funds raised will be used to beef up the firm’s balance sheet and focus on the core business. Mitie issued a string of profit warnings in the past couple of years, and today’s announcement is a continuation of the group’s turnaround plan. Cutting debt and getting back to basic’s business wise should help rebuild investor confidence.
CYBG (LON:CYBGC) shares are higher on the back of UBS upgrading the stock to buy from neutral, but at the same time the bank lowered its price target to 170p from 195p.
JP Morgan raised their price target for Ocada to 1,073p from 1,070p, and the stock is higher today.
EUR/USD is largely unchanged despite the poor inflation data from the eurozone. CPI in the currency bloc was revised lower to 1% from 1.1%, and the core CPI reading was revised to 0.9% from 1.1%. The report paints a picture of falling demand in the region, and that is likely to increase chatter for a stimulus package from the European Central Bank.
Deere shares are likely to be in focus today in the wake of Friday’s disappointing update. Third-quarter EPS came in $2.71, which undershot the $2.85 forecast, and the group lowered its full-year revenue guidance again, and it now expects annual revenue to increase by 4%. The company claimed that farmers are holding-off on machinery purchases due to the trade spat between the US and China. On Friday, the stock managed to close higher despite the poor update, and it appears the bad news was priced in on the run up to the announcement.
We are expecting the Dow Jones to open 220 points higher at 26,106 and we are calling the S&P 500 up 24 points at 2,912.
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