Asian markets traded mixed overnight and Europe look sets for a similar course. Traders are adopting a wait and see approach before deciding whether the latest round of US – Sino trade talks will be productive. Both sides are making encouraging comments that they are on the right track and whilst that is offering some support to equities the markets know that we have been here before.
Morrisons update kicks off big week for UK retailers
Today is the start of a big week for the UK retail sector, with corporate updates for the festive period. The winners and losers from this crucial time will be unveiled, with Morrisons (LON:MRW) kicking off the reporting today. We have already seen some not as bad as expected numbers from retailer Next (LON:NXT) last week and Aldi’s British unit on Monday reported a record festive week, boosting optimism that we could be in for a solid run from the sector.
So far performances have surprised to the upside, but Investors will be watching closely to see which retailer will be left holding the turkey. Speculation is rife that Debenhams (LON:DEB) had the worst Christmas sales and could issue a profit warning any day now, prior to its trading update on Thursday. Debenhams is currently trading some 86% lower across the year, falling from highs of 36p to under 5p on Monday, putting it in prime territory to be snapped up by 30% stake holder Mike Ashley.
2018 has been a difficult year for retailers as consumer confidence has deteriorated amid Brexit uncertainties. There are signs that retailers benefited from a late surge in consumer spending which could be enough to see many home and dry. Although eyes will be particularly trained on the likes of Mothercare and Quiz as 2019 is lining up to be another challenging year.
Will EUR/USD push through $1.15?
The euro was the best performing currency on Monday despite a mixed bag of data. The strength in the euro was particularly notable given dismal German factory orders in the previous session. Traders will be hoping for more resilience from German industrial production figures and eurozone confidence numbers today, although there is a good chance that the data will do more harm than good to the euro.
Industrial production is expected to have declined 0.8% in November year on year, down from a 1.6% increase in October. This will be just the latest sign of an economic slowdown in the eurozone, as trade tensions have sapped momentum from the continent. However, if risk appetite remains strong there is a good chance that the euro, like today, will be capable of shrugging off undesirable numbers.
Opening calls
FTSE to open 31 point lower at 6778
DAX to open 43 points higher at 10790
CAC to open 32 points higher at 4751