Fresh concerns about Italy’s borrowing costs have shaken European stock markets. It has been reported that the two coalition partners in Rome are keen to press ahead with increased spending, which would put them on a collision course with Brussels. A rise in Italian government bond yields has hurt Italian banking stocks, and it has also soured sentiment around the continent.
H & M (LON:0HBP) shares are higher this morning after the retailer announced a 9% rise in third-quarter sales. The fashion house confirmed that online sales in the third-quarter jumped by 32%, and the firm said it is making a more concerted effort to focus on e-commerce. The industry is changing, and H&M are getting better lease agreements for new and existing stores, and they have opened fewer stores. This shows they are keen to shift the focus away from the high street, and put the emphasis on online shopping. Inventories are ‘still high’ and this is a little concerning. The stock gapped higher, and while it holds above its 200-day moving average at SKr141.28, its outlook could remain positive.
Saga (LON:SAGAG) posted a fall in first-half profits of 4% as the company trimmed its prices in order to entice new sales. At the end of last year the company revealed a profit warning, and the firm’s response was to drop prices in order to retain existing clients and attract new customers. The move came at the cost of lower profits. Costs fell from £126 million to £120 million, but the company would need to keep trimming expenses to off-set the lower prices.
The US dollar index is higher in the wake of last night’s Federal Reserve update, interest rates were hiked and the US central bank issued an upbeat outlook for the US economy. Traders are pricing in a high probability of a rate hike in December, and further monetary tightening in 2019 is expected. EUR/USD and GBP/USD are lower this morning due to the US dollar strength.
At 1.30pm (UK time), the US will release the latest jobless claims, the second-quarter GDP, trade balance and durable goods report. The US economy has been performing well lately, and given the trade spat between the US and China, the trade figures could have the biggest impact on the markets. President Trump has more tariffs lined up for China, and the report could stir up further discontent between the two administrations
We are expecting the Dow Jones to open down 20 points at 26,365 and we are calling the S&P 500 flat at 2,905.
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