Stock markets are a mixed bag this morning in the wake of the sell-off in Asia overnight. The disappointing US retail sales numbers yesterday rattled Asian investors as the announcement suggests the US economy isn’t as strong as initially thought. Chinese CPI cooled to 1.7% in January from 1.9% in December, and the PPI update slowed to 0.1% from 0.9% in December. These reports point to falling demand in China, and that plays into the wider slow down story. There is more political uncertainty in Europe as Spain will hold a snap election, but the news wasn’t a surprise, and the political uncertainty won’t help the Spanish economy.
RBS (LON:RBS) posted respectable full-year figures. Operating profit before tax was £3.35 billion. Operating profit before tax for the fourth-quarter was £572 million, which exceeded the estimate of £371 million. The bank declared a final dividend of 3.5p, and it also announced a special dividend of 7.5p – its first special dividend since the credit crisis. Given the government’s stake in the bank, it is due to collect roughly £800 million in the form of a pay-out. On the year, impairment provisions were £3.3 billion, which is an improvement on the £3.8 billion last year. The common equity tier 1 ratio for 2018 was 16.2%, and that compares with 15.9% a year ago. One disappointing aspect of the report was that net interest margin dipped from 2.13% to 1.98%, but that is likely to be the case for UK banks across the board. RBS is clearly heading in the right direction, and it is slowly shaking off the negative image it gained during the credit crisis.
Segro (LON:SGRO) shares slipped even though the company posted a 24.4% rise in full-year adjusted pre-tax profit to £241.5 million. The property firm announced plans to raise £450 million and beef up development as demand is strong. The rise of online shopping has greatly helped the warehouse specialist, and that is in stark contrast to the traditional property groups what own shopping centres – which are experiencing steady declines in footfall. The full-year dividend was upped by 13.3p to 18.8p – which underlines their confidence in the business. The stock has been pushing higher since late December, and if it holds above 640p – 200-day moving average, it might retest the 680p area.
Standard Life (LON:SLA) Aberdeen shares are in the red after Mitsubishi UFJ Trust and Banking Corporation sold-off a large block of shares in the firm.
EUR/USD is in the red after the Spanish CPI report showed the rate dipped to 1% from 1.2% in December. The update underlines the falling demand in the country, which chimes in with the rest of the eurozone.
GBP/USD jumped on the back of the impressive UK retail sales numbers. The January report showed a 1% jump in sales, which comfortably topped the 0.2% forecast. Deep discounting by retailers is a possible explanation for the surge in sales.
PepsiCo (NASDAQ:PEP) and Deere & Co will be in focus today as both companies will release their latest quarterly earnings. Deere & Co has been in the firing line of the US-China trade war, and investors will be listening out for the group’s outlook and gauging the strength of the domestic agricultural sector.
We are expecting the Dow Jones to open 49 points lower at 25,390 and we are calling the S&P 500 down 4 points at 2,741.
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