It’s been a positive start for markets in Europe this morning, with the FTSE100 up at three week highs, despite a weaker US session, after reports emerged that a US, China trade deal was unlikely to be concluded this month.
Asia markets shrugged those trade concerns off as the Bank of Japan kept monetary policy unchanged with Governor Kuroda saying that he was confident that the Japanese economy would pick up, despite the central bank downgrading its assessment of the economy over the next 12 months. This in itself has reassured the markets that Bank of Japan policy is unlikely to change any time soon, and remain accommodative.
High street retailer H & M (LON:0HBP) was able to report a welcome spot of good news this morning when it announced that Q1 sales came in well above estimates at Skr 51bn, a rise of 4%, well above expectations.
In the last two years the company has struggled to hit its sales targets due to large build ups in inventory. The company appears to be succeeding in reducing these over hangs as a result of lowering its prices.
Frankie and Benny and Wagamama owner Restaurant Group (LON:RTN) shares have also jumped sharply in early trade after the company reported its final results. Total sales showed a rise of 1% to £686m, even though profits were sharply lower, due to a £39.2m exceptional pre-tax charge. Like for like sales also showed a decline of 2% but it was better than markets had been expecting. This may well account for this morning’s jump in the share price, as well as the fact that trading for the ten weeks to March showed a rise of 2.8%, with Wagamama showing a particularly strong performance.
In a trading statement issued this morning house builder Berkeley Group (LON:BKGH) reiterated its full year guidance for the year, but also said that it was “mindful of the potential for short term market dislocations from the current political backdrop”
Pubs group J D Wetherspoon (LON:JDW) also reported its latest numbers for the six months to the end of January, and while revenues showed a rise of 7.1% to £889.6m profits fell 10.5% to £48.6m, due to increasing costs, which are likely to continue for the rest of the year.
Commenting on the results chairman Tim Martin couldn’t resist taking a swipe at “the establishment“ as he warned that the outlook for the second half could be affected by “adverse economic consequences” if the referendum result is not respected.
The pound has taken a tumble in early trading as traders cash in some of this week’s strong gains, ahead of the weekend. There’s still a significant amount of tail risk in being overly exposed to sterling even now given that while MPs have shown they have no appetite for a “no deal” Brexit, they haven’t as yet taken any steps to reverse the current legal default position which is we leave without a deal on the 29th March. Ultimately talk is cheap, and markets require certainty, something that still remains in short supply.
Oil prices have continued to edge higher, hitting their highest levels this year yesterday, as extended OPEC production cuts and lower inventories help underpin prices, helping to push oil and gas sector stocks towards their best weekly performance in over a month. OPEC is due to meet in Baku this weekend to review its current policy. There is a risk that in pushing up prices at a time when global growth is slowing they could precipitate a sharper slowdown and a fall in demand.
In the US, Boeing (NYSE:BA) shares are likely to remain the focus of attention after reports that the FAA were persuaded to change their stance on grounding the aircraft after reports emerged that the plane was stuck in a dive prior to impact. This new revelation raises fresh concerns as to whether the aircraft will ever be able to fly again given the shattering effect any findings might have about the competence of Boeing officials given that software problems with this particular plane were known about in the wake of the first crash in October last year.
Tesla (NASDAQ:TSLA) shares are also likely to be in focus after the unveiling of the Model Y, a new crossover electric SUV which is set to retail at a minimum $39k, all the way up to $60k depending on specification.
Dow Jones is expected to open 67 points higher at 25,775
S&P500 is expected to open 6 points higher at 2,814
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