European stocks are higher this morning despite the continued political uncertainty in Europe and Asia. The political landscapes in the UK and Italy are still unsettled, and the US-China trade tensions rumble on. Theresa May is still hanging in as British Prime Minister even though she is on shaky ground, and dealers await the EU’s response to Italy’s budget plans.
Renault (PA:RENA) shares are in the red after it was reported that Carlos Ghosn was arrested on suspicion of violating financial trading rules. Mr Ghosn is both the CEO of Renault and the Chairman of Nissan, and the story has rocked investor confidence in the Paris-listed stock.
Diploma (LON:DPLM) shares are in demand this morning after the company posted a 9% rise in full-year pre-tax profit, and revenue for the time period increased by 7%. The total dividend was hiked by 11% too. The group expressed some concern in relation to Brexit, but they have already started building up their inventory to ensure operations run smoothly. Despite the slightly uncertainty surrounding the UK’s impending departure from the EU, the company is confident it can achieve its medium-term goals. The stock has been in an upward trend for three years, and should the bullish move continue it could target 1,500p.
Over the weekend, Babcock (LON:BAB), played down a story suggesting the company will have to endure a larger write-down in asset value. There was speculation the group would take a £100 million hit in relation to the Avincis helicopter – a company which it an acquired four years ago. The firm will release its first-half figures on Wednesday, and investors will be listening out for restructuring plans as the firm has been ‘exiting low-margin businesses’ recently. The stock has been in decline since June, and if the bearish move continues it could target 500p.
According to Rightmove, average UK house prices fell by 0.2% in November on a yearly basis. It was the first year-on-year fall in seven years. On a monthly basis, average asking prices dipped by 1.7% - its biggest monthly drop since 2012. The news put pressure on home builders like Persimmon (LON:PSN), Barratt Developments (LON:BDEV) and Berkeley Homes.
Tech stocks will be in focus today after they endured a tough time last week. Traders are worried that we have reached peak iPhone sales, and related companies like Nvidia sold-off too. Facebook (NASDAQ:FB) was under fire from an article in the New York Times, which claimed it ignored the Russian interference in the US presidential election in 2016, a claim that the social media giant strenuously denies.
GBP/USD is a fractionally higher today due to weakness in the US dollar. Brexit is still very much in the news, and uncertainty still persists. The pound has only recouped a small bit of the ground lost late last week, but until we get more clarity in relation to Brexit, sterling could find it difficult to attract buyers.
We are expecting the Dow Jones to open 7 points higher at 25,420 and we are calling the S&P 500 up 2 points at 2,738.
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