Equity markets are largely lower this morning as US-China trade talks have stalled. Recently there has been huge hype in relation to the progress that has been made, but now it appears the talks have hit a bump in the road. It is believed the US would like additional concessions regarding intellectual property rights before they consider rolling back on tariffs. The Chinese government are very unlikely to do such as move as they are interested in playing the long, because President Trump won’t be in the White House forever.
German GDP in the third-quarter came in at 0.1%, while economists were expecting -0.1%. The economy contracted by -0.1% in the second-quarter, so the largest economy in Europe managed to avoid a technical recession. This morning’s news is positive, but let’s remember that minimal growth is noting to get overly excited about.
The Chinese economy continues to cool down as the latest economic reports showed overnight. Fixed asset investment, retail sales and industrial production came in at 5.2%, 7.2% and 4.7% respectively. All reports registered declines in addition to undershooting economists’ forecasts. Mining stocks are largely lower this morning on the back of the data from China, as the country is a major importer of minerals.
Burberry (LON:BRBY) posted respectable first-half numbers. On a pro-forma basis, revenue increased by 5% to £1.28 billion, and profit before tax rose by 8% to £189 million. Comparable store sales in the six month period increased by 4%. Sales in Asia were strong as China, South Korea as well as Japan all saw decent rises, but Hong Kong suffered on account of the political unrest. Growth in Europe and the US was more subdued, but that’s not surprising. The company maintained its full-year outlook, plus the dividend was nudged higher by 3% to 11.3p. The stock is up on the news.
FirstGroup (LON:FGP) shares are in the red as the group saw its first-half loss before tax widen to £187.1, from £4.6 million last year. The company took a number of charges, which is why the loss deepened. £124.4 million was in relation to the Greyhound impairment, and over £59 million was incurred on account of the North American self-insurance reserve. The First student fleet is performing well and it is growing its market share. On a like-for-like basis, the rail and bus divisions saw passenger revenue increase by 4.9% and 1.6%. The full-year guidance was maintained.
EUR/USD hasn’t moved much today. French CPI came in at 0.9%, and the consensus estimate was 0.9%. At the start this month the European Central Bank (ECB) restarted their quantitative easing (QE) scheme, which will entail buying €20 billion worth of government bonds per month. When you take into account the low levels of demand in the currency bloc, you can see why the central bank kicked-off QE again.
GBP/USD might see some volatility this morning as the latest UK retail sales report will be posted at 9.30am (UK time), and economists are expecting to see 0.2% growth.
Cisco Systems (NASDAQ:CSCO) reported their first-quarter figures after the closing bell last night. EPS was 84 cents, which topped the 81 cents forecast. Revenue increased by 1% to $13.16 billion, marginally exceeding forecasts. The numbers were solid, but the forecast let the company down. As the group expects second-quarter EPS to be 75-77 cents, while the consensus was 79 cents. The company anticipates revenue to slip by between 3% and 5, but traders were predicting growth of 2.6%.
NVIDIA (NASDAQ:NVDA) will be in focus today as the firm will reveal its third-quarter figures after the closing bell. The group has been caught in the cross fire of the US-China trade spat, and the group expressed concerns about the trading relationship in its previous quarterly update. In August, the group posted its second-quarter numbers. EPS and revenue were $1.24 and $2.58 billion respectively, both metrics topped forecasts.
We are expecting the Dow Jones to open 28 points lower at 27,755 and we are calling the S&P 500 down 3 points at 3,091.
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.