Stocks Steady As U.S.-China Standoff Continues

Stocks Steady As U.S.-China Standoff Continues

CMC Markets  | Sep 14, 2018 10:38

European stocks are slightly higher this morning as traders are cautiously optimistic about the state of global trade. The US and China are still locked in a trade spat, and both sides are content to hold their positions. Traders are viewing no new negative news as a positive for stocks.

J D Wetherspoon (LON:JDW) posted a 16.5% rise in full-year pre-tax profit, and revenue ticked up by 1.98%. The pub group cited the warm weather and the World Cup for the solid results. Like other companies in the pub sector, the firm has had to contend with higher costs in the form of raised rents, increased minimum wages, higher power costs and the sugar tax. The group had a respectable start to the new financial year as six week like-for-like sales jumped by 5.5%. Pub closures across the UK has been the trend for a number of years, but Wetherspoons have been going from strength to strength. The stock has been in an upward trend for over two years, and if the bullish move continues it could target 1,341p.

House builders like Barratt Developments (LON:BDEV) and Taylor Wimpey (LON:TW) are a little lower today after the Bank of England (BoE) chief, Mark Carney warned that a no-deal Brexit could bring about higher interest rates, and house prices might fall as much as 35%. The move in the home builders is relatively small, and it is worth nothing there were similar warnings from the BoE on the run up to the EU referendum, and house prices continued to rise despite the ‘Leave’ side winning.

Mining stocks like Anglo American (LON:AAL) and BHP Billiton (LON:BLT) are higher this morning on the back of the positive Chinese industrial production report. The update showed that industrial output increased by 6.1% in August, which was a slight improvement on July’s 6% rise. It is worrying that fixed asset investment fell to an all-time low.

The Co-operative Group revealed a 4.4% rise in like-for-like food sales, and the division accounts for three-quarters of total revenue. The takeover of Nisa helped sales and profit rise by 10% and 85% respectively. The wholesale aspect of the business will provide diversification for the group which should lower overall risk.

The US dollar continues to be weak in light of yesterday’s disappointing inflation figures, and EUR/USD and GBP/USD are higher on the back of it. The Italian CPI rate in August came in at 1.6%, and the July report was revised down to 1.6% from 1.7%. The pound hasn’t moved much despite Mr Carney’s warning about house prices.

We are expecting the Dow Jones to open up 50 points at 26,195 and we are calling the S&P 500 up 5 points at 2,909

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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