Markets Subdued, Intel Pops

It has been a quiet trading session as there has been little in the way of exciting news flows.

Europe

In the past few days, the same news stories have been in circulation, vaccines are being rolled out, harsh restrictions are in place and hopes of Joe Biden’s stimulus plans being released. Before the week is out, we should hear details of Biden’s spending scheme, there has been talk the package will be in the trillions of dollars. It feels like the lacklustre mood will not be shaken off until we hear what the future Biden administration has planned. European equity markets are a touch higher as the end of the days draws near.

Persimmon (LON:PSN) posted a respectable set of fourth quarter numbers. The housebuilder confirmed that demand was robust throughout the second half. Average selling prices ticked up by 7% to £230,500. Group revenue dipped by 9.6% to £3.33 billion because construction was impacted by the pandemic. Forward sales stand at £1.68 billion, which is up from £1.35 billion last year. It is not surprising there was a fall in the number of houses delivered and a rise in the forward sales. It seems that clients are keen to snap up properties before the end of March, when the stamp duty exemption on properties worth up to £500,000 ends. The stock is in the red but it is worth noting that it hit an eight month high late last month so the broader sentiment is still positive.

ASOS (LON:ASOS) posted its figures covering the four months until the end of last year. Group sales increased by 23%. The online fashion retailer said its investment in the business helped it facilitate and tap into high demand. The environment is uncertain but demand exceeded their initial expectations. The customer base increased by 1.1 million to 24.5 million. ASOS knows the importance of investing in its business, hence why the capital expenditure guidance was lifted by £20 million to roughly £190 million. The pandemic has been a double edged sword for the company. On one hand, demand surged, but at the same time costs associated with Covid-19 increased too. Margins were squeezed due to the additional expenses but the company still predicts that profit before tax will be at the top end of estimates.

Just Eat (LON:JE) benefitted greatly from the lockdowns and that was reflected in today’s fourth update. Total orders in the three month period rose by 57%, while gross merchandise value (GMV) jumped by 68%. The UK division was the standout performer as delivery orders rocketed by 387%. Revenue in the fourth quarter is tipped to be €720-€740 million, which would be a huge increase on the €451 million posted in the same period last year. Management expect full year revenue growth of more than 50%. The adjusted EBITDA margin is expected to be roughly 10%. Just Eat hopes to wrap up the Grubhub takeover in the first half of 2021 as regulators approved the deal.

Bookmakers suffered as a result of the pandemic due to the cancellation of sporting events as well as the forced closure of shops amid lockdowns. William Hill (LON:WMH) said that yearly group net revenue fell by 16% to £1.32 billion but things improved towards the end of the year as net revenue rose by 9%. A strong online performance helped the US unit post a 32% jump in annual net revenue. The London-listed group is in the process of being acquired by the US’s Caesars Entertainment.

The EU has approved LSE’s takeover of Refinitiv, which should pave the way for a rival to Bloomberg in the financial data sector.

Canada’s Couche-Tard has confirmed that it has approached France’s Carrefour (PA:CARR) with a €20 per share offer.

US

US indices, like their European counterparts, are experiencing low volatility as the sentiment is subdued. It seems that dealers across the pond are also sitting patiently on the fence until there is an announcement from President-elect Biden with regards to spending.

Headline CPI in December ticked up to 1.4%, from the 1.2% posted in November. The core reading is considered to be a better gauge of underlying demand as it removes commodity prices, the level remained on hold at 1.6%. It appears that demand has basically remained static. This evening the Beige book report will provide us with an update on the state of the economy. Broadly speaking the rebound has been robust but there are some concerns the recovery is fading a little.

JPMorgan (NYSE:JPM) lifted its rating for Exxon Mobil (NYSE:XOM) from neutral to overweight, the price target was upped from $50 to $56. Earlier this week, Morgan Stanley (NYSE:MS) and Citigroup (NYSE:C) raised their price target for the oil major too.

Target (NYSE:TGT) shares have hit yet another all-time high as comparable sales over the festive season increased by 17.2%. Online sales in November and December more than doubled, by contrast, same stores sales increased by 4.2%. Appliances and sporting goods proved to be popular with Christmas shoppers. The stock is now slightly in the red.

General Motors (NYSE:GM) notched up a new record high following yesterday’s news that it planning to deliver electric vans this year. The long established automaker plans to invest $27 billion in electric vehicles by 2025. General Motors clearly have green eyes for Tesla’s success.

Intel (NASDAQ:INTC) shares are up on the back of the news that CEO Bob Swan will step down on February 15. The chip maker has been feeling pressure from activist investor Third Point who urged the group to ‘evaluate strategic alternatives’. Mr Swan will be replaced by Pat Gelsinger, VMWare’s CEO.

FX

The CMC GBP index is a little higher as it has built on yesterday’s gains. In recent months, members of the Bank of England (BoE) mentioned negative interest rates several times. Yesterday, Andrew Bailey, the governor of the BoE, described negative rates as ‘controversial’. Mr Bailey also said that it was too soon to think about extra stimulus measures being applied. Traders took that as a sign the BoE will not be going down the route of negatives rates in the near-term or possibly ever.

EUR/USD is in the red on the back of the dollar’s upward move. The currency pair has handed back a lot of the gains that there achieved yesterday. If EUR/USD can hold above the recent lows, the broader uptrend should continue.

Commodities

Gold is broadly flat on the session as the wider muted mood in the markets has impacted the commodity. The metal has been trending lower in the past week but while it holds above the lows of the week, it could look to retest $1,900.

Brent crude oil and WTI sold off this afternoon but they turned around in the wake of the EIA report as a larger than expected fall in inventories was registered. US oil stockpiles fell by 3.24 million barrels, while the consensus estimate was for a draw of 2.55 million barrels.

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