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Mixed Moves For Europe, TUI Slump On Earnings Warning

Published 07/02/2019, 11:54
Updated 03/08/2021, 16:15

Equity markets in Europe are mixed today. Investors lack enthusiasm as there is little in the way of major macroeconomic news. Stock markets have reached multi-month highs this week, and now dealers are wondering which way to look. For now, the bounce back that started in late December is on hold, and it seems like traders are waiting to find out about US-China trade talks before making their next move.

Compass Group (LON:CPG) shares have set an all-time high this morning after the company released solid revenue figures and upgraded its outlook. Organic revenue for the first three months ticked up by 6.9%, and the firm now anticipates full-year revenue growth to be at the higher-end of their 4-6% target. Not many stocks are reaching all-time highs there days, so it makes the rally all the more impressive.

Bellway (LON:BWY) shares are a little lower today after the company issued a mixed statement. The group expects first-half revenue to rise by more than 12%, and the company said it anticipates to sell more homes this year even though there is a serious lack of clarity in relation to Brexit. At the back end of last year, the firm embarked on a cost saving initiative, and today the home builders expects operating margins to slip to 21.5% from 22.5%, and that weighed on investment sentiment. The property market is cooling and lower margins could be the signal that earnings might fall in the years to come.

TUI (LON:TUIT) shares sold-off heavily after the company cut it full-year forecast. The tour operator now expects annual profit to be broadly flat on the year. The company blamed a weak pound and an unusually warm 2018 for the trimming of the guidance. TUI warned that it is unlikely to meet its previous guidance of at least 10% annual growth in underlying earnings in the three years until 2020. The stock has been pushing lower since September, and a break below 1,000p, is likely to pave the way for further losses.

GBP/USD is lower again today. The Halifax average house price index report showed that prices grew by 0.8% in the three months until January on an annual basis, while economists were expecting 1.5%. The Bank of England (BoE) interest rate decision and inflation report will be released at 12pm (UK time), and the latter is likely to be the more interesting of the two announcements. Mark Carney, the head of the BoE, will hold a press conference from 12:30pm (UK time).

EUR/USD is also lower, and the disappointing eurozone updates are weighing on the euro. German industrial output slipped by 0.4%, and Italian retail sales dropped by 0.7%. This is further evidence the currency bloc is experiencing an economic slowdown.

Chipotle (NYSE:CMG) shares will be in focus today after the company announced strong results last night. Fourth-quarter EPS were $1.72, which easily topped the $1.37 forecast. Revenue was $1.23 billion, while traders were expecting $1.19 billion. In the final three months of the year, digital orders soared nearly 66%, and it is encouraging to see the company is embracing the change in technology.

We are expecting the Dow Jones to open 60 points lower at 25,330 and we are calling the S&P 500 down 5 points at 2,726.

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. "

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