The FTSE 100 is just about in positive territory this morning, propped up by natural resources stocks, as companies like Glencore (LON:GLEN), Rio Tinto (LON:RIO) and Royal Dutch Shell (LON:RDSa) are higher.
Petra Diamonds (LON:PDL) shares have fallen 17.7% after the company issued a profit warning. The rally in the South African rand has hit the company, and it also lowered its diamond production forecast from between 4.8 million to 5 million carats, to between 4.6 million and 4.7 million carats. Diamonds have been an underperforming commodity, while the company is now going to focus on quality over quantity when it comes to its produce. The share price has been in a decline for over a year, and if the negative move continues it could target 60p.
Shares in Smurfit Kappa Group (LON:SKG) are up 2% at 2580p, after Numis upped their price target for the stock to 2800p from 2600p. The stock has been in an upward trend since last year, and it hit an all-time high last week so the sentiment is obviously bullish.
Diageo (LON:DGE) shares are down 1.6% at 2516p after RBC lowered their rating on the sector to perform from outperform. The bank also cut its price target on the stock to 2400p from 2600p. The stock has been drifting lower in January, and if the negative move continues it could target 2500p.
The bounce back in the US dollar this morning has dented GBP/USD and EUR/USD. The greenback had a rough ride last week US Treasury Secretary Steven Mnuchin stated a weak dollar is good for trade, but Mr Mnuchin later did a u-turn on that previous comment. Today’s move in the pound and euro are US dollar driven.
At 1.30pm (UK time) the US will announce the core personal consumption expenditures (PCE) rate and traders are expecting a reading of 1.5%, which would be no change on the month. This is a closely watched indicator by the Federal Reserve, and therefore dealers will be keeping an eye on it too.
We are expecting the Dow Jones to open down 36 points at 26,580, and we are calling the S&P 500 down 7 points at 2865.
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