European equity markets are mixed, which isn’t surprising given the different signals from the US-China trade situation. There continues to be chatter that both sides are looking to strike phase one of the trade deal this month – which would probably include the rolling back of tariffs. That being said, dealers haven’t forgotten the remarks from President Trump that a deal could be delayed until after the 2020 presidential election.
The unpredictability of Mr Trump has not been forgotten by some dealers, which is why European equity markets don’t have a clear direction.
Dunelm (LON:DNLM) shares are in demand after the group said it expects full-year profit before tax to be above previous expectations. Improvement in sourcing as well as better sell through has boosted margins, and operational costs remain well controlled too. The group is one of the few retailers that have been performing well recently. The group has embraced e-commerce, and today it confirmed it has successfully transitioned all of their customers to the new digital platform, which should assist future performance too.
It was reported that Moncler (LON:0QII) are in talks with Kering (LON:0IIH) about a possible merger. Both shares are enjoying gains today, in particular Moncler. There seems to be M&A activity in the luxury sector recently seeing as LVMH agreed to acquire Tiffany. It is possible the latter deal set the wheels in motion for the Moncler-Kering potential tie-up. High-end brands usually outperform whenever there is a cooling in the wider retail sector as the super-rich can usually afford to keep spending.
GBP/USD has hit a fresh seven month high as traders are pricing in a victory for the pro-business Conservative party. Opinion polls continue to put Boris Johnson’s party in the lead, and should the bullish run in the currency pair continue it might target 1.3178.
EUR/USDis fractionally higher as the eurozone economy grew by 1.2% in the third-quarter – meeting forecasts. On a monthly basis, retail sales dropped by 0.6%, which underlines the weak demand in the region.
Kroger (NYSE:KR) will be in focus today as the company will release its third-quarter results. In September, the group’s second-quarter EPS topped forecasts, but the group expressed caution about achieving its targets as the turnaround isn’t going as well as initially planned. The group is taking the battle to Walmart (NYSE:WMT) as well as Amazon (NASDAQ:AMZN), hence why it signed a deal with Ocado (LON:OCDO). Having ambition is admirable, but the group might need to accept that change can be slow to implement.
Brown Forman (NYSE:BFb), the owner of Jack Daniels, has been caught in the cross fire of the US-China trade war, as in the latest quarterly update the group cut its forecast. Not only does the group have to contest with the trade spat between the two largest economies in the world, there is an economic slowdown in Europe and a parts of Asia too. The firm will release its second-quarter figures today.
We are expecting the Dow Jones to open 56 points higher at 27,705 and we are calling the S&P 500 up 5 points at 3,117.
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