Trade Hopes Remain In Focus; Boohoo In Vogue

Trade Hopes Remain In Focus; Boohoo In Vogue

CMC Markets  | Jan 14, 2020 11:03

Stock markets are broadly showing modest gains this morning as the sentiment surrounding the US-China trading relationship remains positive. Yesterday afternoon, the US removed China from their list of currency manipulators, and the move helped relations between the two countries. It was clearly a play Washington DC to progress the trade relationship as the interim trade deal is expected to be signed tomorrow.

Boohoo (LON:BOOH) are in vogue as the firm revealed a 44% increase in revenue for the Christmas period. The strong festive performance prompted the online fashion house to raise its full-year revenue guidance to 40%-43%, while the old guidance was for between 33% and 38%. The earnings margin guidance was upped fractionally too. The stock hit a fresh record high on the back of the results.

Grafton Group (LON:GFTU_u) confirmed that trading in November and December was ‘better than anticipated’. The firm said that revenue from continuing operations ticked up by 2.7%. Uncertainty in relation to Brexit has impacted the British construction sector, which explains why Grafton’s UK operation saw a 1.1% fall in revenue on a constant currency basis. The Dutch division outperformed as revenue jumped by more than 37%, while the Irish unit posted a respectable 6.2% increase in revenue. Grafton are ‘positive’ about growth opportunities, but they are ‘cautious’ about the recovery in the British merchant market. All things considered it was an optimistic trading update.

Elementis (LON:ELM) described the final-quarter as ‘somewhat subdued’, so the company predicts that adjusted operating profit for the year will be in between $122 million and $124 million, and keep in mind last year’s figure was $133 million. The chemicals group claimed that a slowdown in the North American drilling industry hurt their energy business. The stock sold-off sharply on the open, and if it breaks below the October low, it might pave the way for 128p to be retested.

The UK gaming sector will come under further pressure as a ban on using credit cards will be introduced in mid-April. The move is the latest by the government to tighten regulation on the sector as some users of gaming sites are betting money they do not have. As far as regulation goes, it seems to be one-way traffic, so UK-based firms are likely to keeping expanding overseas. Shares in 888 (LON:888), Flutter Entertainment (LON:FLTRF), plus William Hill PLC (LON:WMH) are showing small losses.

Taylor Wimpey (LON:TW) shares are slightly higher this morning after the company announced that full-year figures will be in line with expectations. Operating profit margin is tipped to be in the region of 19.6%, but keep in mind last year’s level was 21.6%. The number of affordable home delivered increased by 3.8%. The sector has been impacted by higher costs, but Taylor Wimpey confirmed this morning that cost pressures are softening.

JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) will be in focus today as the banks will post their latest quarterly figures. In recent reporting seasons it has become clear that major banks are trying to become more dependent on deriving income from wealth management, investment banking fees, and in some cases retail banking. The days of being overly reliant on trading income seems to be over as a lower risk attitude combined with tighter regulation has prompted management to change strategy.

We are expecting the Dow Jones to open 18 points higher at 28,925 and we are calling the S&P 500 up 1 point at 3,289.

"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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