European equity markets are broadly quiet this morning as volatility remains low. The stalemate between Madrid and Catalonia still continues, and this is keeping the pressure on Spanish stocks. Madrid is moving to strip Catalonia of its autonomous powers and impose direct rule, and even though we haven’t had a major reaction from the Catalan politicians, traders are getting nervous.
Pendragon's (LON:PDG) profit warning prompted traders to dump the stock. The car dealer expects profits to be £60 million this year, instead of the £75 million that is previously forecasted. The firm blamed a drop in consumer sentiment for the lowered guidance, and stated it was suffering from ‘significant market pressure’. It expects demand for new cars to remain weak until the first-half of next year. The shares are down 17.1%.
There is talk that GKN (LON:GKN) is considering splitting into two companies, and the stock is up 3% on the back to the report. Earlier this month the company the engineering company stated it would two incur two charges that could would cost up to £40 million. That surprise announcement sent the share price tumbling, but the chatter about a possible spilt into two individual companies is helping the stock recover some of its losses.
Barclays (LON:BARC) shares have been hit by a double downgrade as HSBC cut its price target to 240p from 250p, and Deutsche Bank (DE:DBKGn) lowered their price target from 231p to 226p.
The US dollar has rallied this morning after dealers are optimistic that President Trump will get his tax reforms passed, and GBP/USD and EUR/USD are weaker. Traders will be keeping an eye on the UK CBI industrial trend orders expectations report, which is due out at 11am, the consensus is for a reading of 9, up from 7 in September.
We are expecting the Dow Jones to open 2 points higher at 23,330, and we are calling the S&P 500 flat at 2575.
Halliburton (NYSE:HAL) and Hasbro (NASDAQ:HAS) will report their third-quarter results today.
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