Europe
The FTSE 100 is in the red as there is a broad based sell-off in the London market. Energy stocks are the worst performer, and there are losses in financials, miners and consumer goods too. The British market is off the lows of the session, and the major eurozone equity markets started off firmly in the red, and are now in positive territory. The macroeconomic picture is still the same, but it seems the fear factor has cooled.
J D Wetherspoon (LON:JDW) issued a mixed second-quarter update. The group said that like-for-like (LFL) sales in the 25 weeks until late January jumped by 6.3%, but the firm said first-half profit will be below previous forecasts, and higher costs were cited for the downbeat outlook. The firms’ expansion continues as it will open between five and 10 new pubs. The group maintained its full-year forecast, and that lifted investor confidence.
Metro Bank (LON:MTRO) shares have sold-off heavily after the bank warned that capital levels and full-year profit will be below expectations. The financial firm predicts that earnings will be approximately £50 million, while analysts were predicting £59 million. The financial firm blamed a ‘soft’ finish to 2018 for the underwhelming update. The bank had to raise capital in July, and even though it confirmed it didn’t raise any capital in the fourth-quarter, investors are still a little wary. When it comes to balance sheet strength, investors don’t take any chances. The stock has been in decline since October, and if the bearish trend continues it might retest the 1,500p region.
It the same old story at WH Smith (LON:SMWH), the travel division put in a strong performance, while the high street operation under performed. LFL sales at the travel operation ticked up by 3%, while the high street division registered a 2% fall in same-store-sales.
Burberry (LON:BRBY) shares are higher this afternoon after the fashion house registered a 1% rise in same-store-sales – which missed expectations. The clothing company confirmed it had a respectable performance in mainland China, and this is encouraging as there have been questions over China’s appetite for western brands.
US
Stocks have bounced back after yesterday’s declines. The US-China trade situation remains unresolved, but the strong corporate earnings from IBM (NYSE:IBM) and Procter & Gamble (NYSE:PG) have taken centre stage.
IBM (NYSE:IBM) shares rallied today as the company posted well received quarterly figures last night. EPS was $4.87, topping the $4.82 forecast, and revenue was $21.76 billion, which was slightly ahead of the consensus estimate. The stock has been pushing higher since late December, and if it clears the $127.00 region, it might retest the $130.00 area.
Procter & Gamble shares jumped on the back of the second-quarter update. EPS rose by 27.6% to $1.25, which exceeded the $1.21 that equity analysts were predicting. Revenue for the period was $17.44 billion, and the consensus estimate was $17.15 billion. Adding to that, the frim raised its guidance for organic sales growth by 1%. The stock has been driving higher since mid-October, and if the bullish move continues, it might target the $100.00 area.
FX
GBP/USD is pushing higher, and has reached a level not seen since mid-November, despite the ongoing uncertainty surrounding Brexit. Nothing has changed, but optimism for the pound keeps growing. The CBI industrial order expectations reading for January swung to -1, from 8 in December, and the consensus estimate was 5.
EUR/USD is largely unchanged on the day. The French business sentiment reading for January was 103, and it met forecasts. The December reading was revised down from 104 to 103. Economic sentiment in France has been strained recently due to the yellow vest protests. The second-largest economy in Europe is undergoing an economic slowdown, and that doesn’t bode well for the currency.
Commodities
Gold hasn’t moved much today as volatility is lacking across the board. The metal has been trading in a small range recently, but the wider uptrend that began in mid-November is still intact, and it might make another attempt on the $1,300 region.
Oil is in positive territory as the energy has been lifted by the broadly positive moves in global equities. The oil market is sensitive to the mood regarding the global economy, and even though the US and China situation is far from resolved, the negative sentiment has evaporated for now.
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