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Chinese Trade Hurts Miners; JD Sports In Fashion

Published 14/01/2019, 10:21
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European stock markets are in the red as traders are concerned about a slowing Chinese economy. The latest trade data showed that imports slumped by 7.6% in December – highlighting the weak demand. Exports fell by 4.4%, which adds weight to the argument that the US-China trade war is hurting China’s economy. China is a major importer of commodities so stocks like Glencore (LON:GLEN), Anglo American (LON:AAL), BP (LON:BP) and Royal Dutch Shell (LON:RDSa)are in the red this morning.

JD Sports (LON:JD) shares’ are in demand after the fashion house reported a strong update. The firm confirmed that like-for-like sales for the 48 weeks until early January grew by 5%. The company had a strong Christmas period and its international expansion is going well. The group opened its first five stores in the US, and two were opened in Thailand. Last year, JD Sports acquired Finish Line sports in the US, and they plan to convert 15 Finish Line stores in the first-half of 2019. Unlike it competitors, JD Sports didn’t engage in short-term ‘discounting unnecessarily’ and that stood to the, in terms of gross margin. The stock gapped higher this morning and has been pushing higher since late December, and if the bullish move continues it might target the 475p region.

Premier Oil (LON:PMO) shares have fallen this morning after the company stated it is contemplating raising funds to buy $1.5 billion worth of oil and gas assets from Chevron (NYSE:CVX). The London-listed energy company has a market capitalisation of approximately £644 million so the potential bid for Chevron’s assets is ambitious. The group is considering selling some or all of its Latin American assets, and undergoing a rights issues in order to fund the move. Given the weakness in the underlying oil market an enormous expansion might not be prudent right now. The stock has been in decline since October, and if the bearish move continues it might target the 55p area.

Dechra Pharmaceuticals (LON:DPH) confirmed that trading was ‘strong’ in the first-half and in-line the forecasts. Revenue for the six-month period increased by 18%. The firm said that Brexit contingency preparations are progressing well. The stock has been range bound in recent months, and a break above 2,374p, might put 2,500p on the radar.

EUR/USD is largely unchanged this morning. German wholesale price index in December dropped by 1.2% on the month, and this could be a sign of weak demand, and might point to softer inflation in the medium-term. On a month-on-month basis, eurozone industrial production fell by 1.7%.

Citigroup (NYSE:C) will be release its fourth-quarter figures today. The bank had a strong third-quarter as earnings topped forecasts. The net interest margin was 2.7% - in line with forecasts. The bond trading and sales department posted a 9% increase in revenue, across the board, trading and investment banking revenue fell. The stock has dropped in recent months due to traders being fearful about the Federal Reserve.

We are expecting the Dow Jones to open 210 points lower at 23,785 and we are calling the S&P 500 down 23 points at 2,573.

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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