Despite a fairly positive week so far for European markets, we’ve slipped lower this morning in anticipation of the latest US Q4 GDP numbers and UK Prime Minister Theresa May’s and US President Trump’s meeting later, following the US Presidents inauguration last Friday.
Whilst Trump and Mexico’s relations deteriorate, the relations between the UK and US appear to be heading in the right direction, with Donald Trump praising the UK’s Brexit move. However, investors may be harder to convince amidst the turbulence that Trumps first week as president has caused and the currency headwinds that Brexit has caused.
Tesco (LON:TSCO) PLC has shot up sharply this morning after unveiling a £3.7bn merger with the wholesaler Booker. Both company boards have stated an ambition to create the UK’s leading food company, hoping that the merger will provide greater efficiency, choice, quality and price in the food market. After the scandal in 2014 caused by an accounting black hole that overstated first half profits by over £250m and the recent legal turmoil this caused, Tesco boss, Dave Lewis is finally restoring confidence in its UK retail business, which has been evident in the 37% rise in the share price since the beginning of 2016.
The banking sector has slipped back today, with share prices in RBS (LON:RBS), Lloyds Banking Group (LON:LLOY) and Barclays (LON:BARC) PLC falling all giving up some of the gains that we saw yesterday.
Whilst there is a lack of UK data out this morning, the markets are looking forward to the final legacy of President Obama with US Q4 GDP data out at 13.30pm. Q4 data is expected to slow down modestly from the Q3 3.5% growth to 2.2%. The state of the US economy will now be viewed through the prism of Donald Trump from now on.
Chevron (NYSE:CVX) is scheduled to report its Q4 earnings before the opening bell. The rebound in the oil price has seen a significant recovery in both share price and profits throughout the year; Chevron is expected to more than double its profits to (EPS) $0.64c a share compared with the $0.26c a share last year. Revenues are also expected to rise to $36.9bn compared with $29.25bn a year ago.
Colgate Palmolive is also projected to see an increase in Q4 earnings, to $0.75c a share on slightly reduced revenues of $3.86bn. This appears to be a common theme as cost savings produce higher profits relative to lower revenues. There is a concern that the recent currency problems in India may have impacted its business there.
Also reporting Q4 earnings is Honeywell International and American Airlines.
Dow Jones is expected to open up by 21 points at 20121
S&P is expected to open up by 2 points at 2298
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