European stocks are a little higher this morning after it was reported that the Italian government are planning on lowering the budget deficit to 2% in 2021, and this has taken pressure off the Italian government bonds market. There is a feeling that the government in Rome won’t be as radical as initially thought, and that is calming investor’s nerves.
Tesco (LON:TSCO) shares are in the red this morning after the company reported first-half operating profit that missed analysts’ forecasts. Operating profit before exceptional items jumped by 23.9% to £933 million, but traders were expecting £992 million. The group posted its 11th consecutive quarter of like-for-like (LFL) UK retail sales growth. LFL UK retail sales increased by 2.5%, which comfortably topped the forecast of 2.2%. The company’s cost cutting programme is going well, and the interim dividend was lifted by 67% on a year-on-year basis. The two ‘Jack’s’ shops that are open are ‘trading really well’ and the Dave Lewis, the CEO, confirmed the group is ‘bang on track with our plans’. The stock has been broadly moving higher for over two years, but it has been drifting lower since August. This morning it gapped lower, and while it remains below the 200-day moving average at 232p – its outlook could remain negative.
Topps Tiles shares are in demand this morning after the firm said profit would beat forecasts. The group announced that full-year pre-tax profit would be above the £15.2 million that analysts are expecting thanks to a strong performance in the last three months. The company said that full-year like-for-like sales should be flat after an increase of 1.2% in the final-quarter. Topps remains cautious due to ‘uncertainty’ in the UK economy. The share price gapped higher this morning, and if it clears the 200-day moving average at 73.4p, it could target the 80p region.
Aston Martin shares have been broadly moving lower in its first day of trading. The luxury car manufacturer has had a bumpy ride so far but that can be expected its first run. High-end brands likes Ferrari (NYSE:RACE) and Hermes have performed well in recent years as the super-rich have seen their wealth grow considerably since the global recovery.
JC Penny shares will be in focus today after the company announced that Jill Soltau will take over as CEO. The department store has been leaderless since May when the previous CEO left for Lowes. The retailer has been struggling for years and it has been reflected in the stock’s downward trend that has been in place for over two years.
EUR/USD is a little higher today due to the pullback in the greenback, and the mixed services data from the eurozone. Italy and France posted services figures that exceeded the flash readings, but the German update undershot the initial reading. The euro has drifted lower recently, but while it holds above the 1.1510 region, its outlook could remain positive.
GBP/USD has also taken advantage of the slip in the greenback. The final reading of the UK services PMI report was 53.9, which was slightly below the 54 that economists were expecting. The pound is hovering around the 1.3000 mark, and it could prove to be a turning point for the currency.
We are expecting the Dow Jones to open up 72 points at 26,845 and we are calling the S&P 500 up 8 points at 2,931.
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