Equity markets in Europe started in positive territory as global investor confidence remains high on the back of the US midterm elections, but the major equity benchmarks have now turned negative. Wall Street racked up impressive gains last night, and the bullish sentiment was mirrored in Asia overnight, and now European markets are in the red. It would seem that the feel good factor has run out of steam.
Sainsbury’s shares (LON:SBRY) are in demand this morning after the company revealed respectable first-half figures. Like-for-like sales for the six month period rose by 0.6%, and keep in mind sales growth in the first three months of the year was 0.2%. First-half profits dropped by 40%, but when you strip out the restructuring costs associated with the proposed merger with Asda, profit rose by 20%. The retailer has encountered a few obstacles from the Competition and Markets Authority in relation to the Asda deal, but the supermarket is complying with the regulator. The sector continues to be ‘highly competitive’, and the group described the Christmas outlook as ‘uncertain’.
Superdry (LON:SDRY) confirmed that first-half revenue jumped by 7.4%. Sales in the second-quarter increased by 11.2%, which easily outperformed the first-quarter, which saw sales increase by 1.3%. Last month, the share price took a knock when the group issued a profit warning. The clothing company blamed the unusually warm weather for the poor sales. The fashion house is continuing to expand its retail outlets, which seems odd given that most retailers are reducing their high street presence. The group’s wholesale and online operations registered high single digit growth sales growth.
Tate & Lyle (LON:TATE) shares are a little higher this morning after the company said that first-half profit was flat on the year. The interim dividend was fractionally increased, but costs ticked higher too. The group maintained its full-year outlook, and that reassured investors. The share price has been pushing higher since March, and if it holds above the 200-day moving average at 622p, the bullish move should continue.
The US dollar index has bounced back a little following yesterday’s large sell-off. The Federal Reserve will announce their interest rate decision tonight at 7pm (UK time), and no change is expected. The markets are pricing in a high probability of a rate hike in December, and tonight’s update might set the tone for next month’s meeting.
GBP/USD is a little lower today in light of the poor UK house price data. The Royal Institution of Chartered Surveyors house price balance fell to -10 in October – its weakest reading in six years.
EUR/USD is also a touch lower this morning. The German trade surplus dipped in September, while the French trade deficit remained largely unchanged.
Walt Disney (NYSE:DIS) will be in focus today as the company will report its fourth-quarter figures. Comcast (NASDAQ:CMCSA) outbid Disney for Sky, but some traders feel that Comcast over paid for the company, and it might turn out that Disney dodged a bullet. Disney now holds a 60% stake in Hulu, not to mention its own impressive back catalogue of content, so the company has a lot going for it.
We are expecting the Dow Jones to open 55 points lower at 26,125 and we are calling the S&P 500 down 10 points at 2,803.
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