Politics continues to weigh on investment sentiment in Europe. Italy’s Prime Minister, Giuseppe Conte, will present the new budget proposal to the EU in the next few hours. Rome is locked in a battle with Brussels over the size of the planned budget deficit, and Mr Conte said the new proposal might be lower than the previous one, but nothing has been announced yet.
The mixed session in Asia overnight suggests that some dealers are already over the 90-day truce between Washington DC and Beijing in relation to trade. It would appear the bullish sentiment didn’t last long.
Greencore (LON:GNC) shares are lower this morning despite the company posting solid full-year figures. On a pro forma basis, revenue grew by 8.7%, and adjusted operating profit ticked up by 1.7%. The company has been preparing for Brexit ever since the referendum in June 2016, and even thought it expressed concerns about a ‘no withdrawal agreement’ situation, it remains confident about the medium-term outlook. In October, the firm announced plans to dispose its underperforming US business and that lifted investor sentiment. The stock has been pushing higher since March, and if the positive move continues it might retest 200p.
Ferguson (LON:FERG) had a respectable start to the year as first-quarter profit rose by 9.9%. The London-listed company derives roughly 90% of its earnings in the US, and the division posted a 9.6% rise in profit. The outlook was optimistic too, as the firm believes that annual profit will meet analysts’ forecasts. The stock sold-off heavily in October when firm confirmed that trading in the UK remained ‘tough’, and the British division continues to be restructured. There are signs the US housing market is cooling, and is likely to hang over the stock.
Rightmove (LON:RMV) shares are in demand this morning despite mixed broker reviews. JP Morgan trimmed its price target from 416p, to 402p, but Deutsche Bank (DE:DBKGn) have raised their rating to buy from hold, and upped the price target 530p, from 440p.
GBP/USD jumped after an advisor to the European Court of Justice expressed the view that the UK could cancel their planned exit from the EU without seeking permission from the other member states. The opinion of the legal advisor is not legally binding, but for some traders it has raised the prospect of no Brexit. UK construction PMI ticked up to 53.4 in November, topping the forecast of 52.5.
Boeing (NYSE:BA) and Caterpillar (NYSE:CAT) will be in focus today as the trading relationship between the US and China has improved a little in light of the 90-day cease-fire in relation to trade. The stocks are very sensitive to the US-China relations, and a lack of hostility in the near-term might prop up the companies.
We are expecting the Dow Jones to open 166 points lower at 25,660 and we are calling the S&P 500 down 18 points at 2,772.
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