Stocks are in the red as a series of factors continue to weigh on global sentiment. The US-China trade standoff, aggressive easing from some central banks, worries about a no-deal Brexit, chatter that Germany is heading towards a recession, political uncertainty in Italy, the financial meltdown in Argentina, and the tensions in Hong Kong are all contributing to the poor economic climate. Every corner of the global has negative news hanging over it, and that is why traders are trimming their equity positions.
TUI shares are slightly higher this morning after the company maintained its full-year outlook despite having a tough time in recent months. The travel firm issued two profit warnings in 2019 as weaker consumer climate and the Boeing (NYSE:BA) 737 Max disaster weighed on the group, and today TUI said the grounding of the aircrafts will cost the firm up to €300 million. In the third-quarter, bookings ‘caught up’, but it is still down 1% on the financial year. Today’s update wasn’t anything special, but it seems to be over the worst of the recent uncertainty, and that might help put a floor under the share price.
Aston Martin shares have hit the skids today after Credit Suisse (SIX:CSGN) downgraded the stock to neutral from outperform, and the finance house slashed their price target to 529p from 1,630p. The high end car maker lowered its sales guidance last month, and that prompted a sharp drop in the stock price. There are concerns that consumer confidence is dwindling, but luxury brands like Aston Martin tend to weather the storm of an economic slowdown better than mid-price brands, as the mega wealthy are generally less impacted by a cooling of the global economy.
Thomas Cook shares are in the red again after yesterday’s update that the group is seeking to raise £150 million, on top of the £750 million it is trying to obtain from Fosun in exchange for its tour business. Questions continue to hang over the group’s financial health, and until the group can shore-up and its finances, the sentiment is likely to remain sour.
GBP/USD is in the red despite the largely positive jobs data from the UK today. The unemployment rate ticked up to 3.9% from 3.8%, but more importantly, the average earnings excluding the bonuses rate came in at 3.9%. Earnings are now at their highest level since the credit crisis, and seeing as CPI is 2%, workers are getting a nice increase in real wages. Fears of a no-deal Brexit outweigh the respectable data.
EUR/USD is a little lower on account of the rebound in the US dollar. German CPI held steady at 1.1%, meeting forecasts, while Spanish CPI cooled to 0.6% from 0.7%. The chatter that Germany will slide into a recession is hanging over the single currency. The German ZEW dropped to -44.1 – its lowest level since late 2011, and that adds to recession speculation fears.
Chip makers in the US like Intel (NASDAQ:INTC), Nvidia, and Advanced Micro Devices (NASDAQ:AMD) are likely to remain in focus given the tightened restrictions on Huawei. The Chinese tech giant is likely to remain at the centre of the trade spat between the US and China.
We are expecting the Dow Jones to open 97 points lower at 25,800 and we are calling the S&P 500 down 12 points at 2,871.
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