Europe
Stocks have sold off as trade woes continue. Investors are cashing in on yesterday’s gains, as trade tensions remain alive and well. Investors will want to see progress being made regarding trade negotiations before they hold on to stocks for several days at a time. As a result, markets are finding it difficult to hold on to a rally, which underlines the weak sentiment.
Greene King (LON:GNK) shares are in the red after the company posted poor full-year figures and issued a cautious outlook. The group revealed a 1.8% decline in revenue and an 11.2% fall in adjusted pre-tax profit. The company cited subdued consumer sentiment, plus higher wages and property costs for the sub-par performance. The pub group will certainly be cheering on the England football team in the World Cup, as the team’s success is likely to translate into higher sales. The share price fell to its lowest level in over a month due to the results.
Shire (LON:SHP) shares are a touch higher as it is looking more likely that the Takeda (T:4502) takeover will go ahead. A group of shareholders in the Japanese company failed to put forward the idea that acquisitions should be approved by shareholders in advance, and the company knocked back the suggestion as they feel it would damage it its competitiveness.
Stagecoach (LON:SGC) has cut its dividend from 11.9p to 7.7p after the company lost the East Coast mainline franchise last month. Westminster took the decision to re-nationalise the line, which led to Stagecoach and Virgin losing the contract. The group confirmed that full-year revenue and adjusted pre-tax profit declined by 18% and 4% respectively. In August 2017, Stagecoach’s South West Trains franchise ended, and that played a role in the drop in revenue. The share price has been in decline for seven months, and if the bearish move continues it could target 120p.
US
US stock markets are mixed as traders remain slightly nervous about the standoff between Washington DC and Beijing regarding trade. The situation is certainly calmer today, but we are not necessarily any closer to an agreement being reached, and this is curtailing bullish sentiment.
Amazon (NASDAQ:AMZN) confirmed it is buying online pharmacy PillPack. Amazon has a track record of disrupting markets they enter, and the announcement sent healthcare stocks like Walgreens Boots Alliance (NASDAQ:WBA) and CVS Health (NYSE:CVS) lower.
The first-quarter growth report was revised lower to 2%, from 2.2%, although economists were expecting no change. The sizeable revision to the GDP reading spooked investors, and given the economic uncertainty regarding the potential trade war, put additional pressure on equities.
FX
EUR/USD is taking advantage of the dip in the greenback. The single currency is holding up well considering the currency bloc posted some mixed economic indicators today. Spanish CPI ticked up from 2.1% to 2.3%, while German inflation slipped to 2.1% from 2.2%. The varied reports point to differing consumer sentiments in the region.
GBP/USD lost ground in the morning even though there were no major economic announcements from the UK. Bank of England policymaker, Andy Haldane, stated a 0.25% rise in interest rates would still leave the monetary conditions ‘extraordinarily accommodative’. The comments failed to turn around sterling’s negative move.
Commodities
It’s the same old story for gold as the metal has fallen to yet another six-month low. The commodity has been in a downtrend since April, and the bearish move is showing no signs of easing up. If the metal falls below $1,250, it could bring $1,236 – the December low – into sight.
The oil market is extending the gains from yesterday after a much larger-than-expected fall in US inventories boosted prices. The fall in US stockpiles come at a time when President Trump is trying to disrupt Iranian oil exports. Brent crude hit a multi-week high, while WTI reached a 43-month high.
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