European equity markets are lower across the board as concerns about politics continues to weigh on sentiment. The Italian budget and Brexit are still hanging over the markets, and now tech stocks are selling-off due to the weakness in the US tech sector.
easyJet (LON:EZJ) registered a 41.4% increase in full-year pre-tax profit to £578 million, which was in line with the recent guidance of between £570 million and £580 million. Revenue increased by 16.8% to £5.89 billion. Forward bookings for the first-half have been strong, and bookings for the summer are ‘promising at this very early stage’. The company has proposed a dividend of 58.6p, which would be an increase of 43% on last year – but it needs shareholder approval. The number were good by any measure, and they are all the more impressive considering the recent struggles of the airline sector.
Compass Group (LON:CPG) has cost cutting to thank for the 7.1% rise in full-year profit. The firm has been trimming labour and foods costs in a bid to offset the higher business costs at the UK division. The operating margin remained steady at 7.4%, and the group has been disposing of non-core assets. The stock has been in a solid upward trend since 2009, and if the bullish move continues it could target 1,750p.
CYBG (LON:CYBGC) shares are in the red after the company expressed concerns about Brexit. The bank said it is impossible to ignore the lower levels of business confidence, and the Brexit negotiations remain unclear. Mortgage lending and core small and medium enterprise increased by 4.5% and 5.6% respectively, but net interest margin dropped to 2.17% from 2.27%. Underlying profit before tax jumped by 13% to £331 million, but it swung to a statutory loss after tax of £145 million due to legacy PPI costs. The stock has been pushing lower since August, and if the negative move continues it could target 200p.
A bounce back in the US dollar has put pressure on EUR/USD and GBP/USD. Germany revealed PPI figures for October which ticked up to 3.3%. The increase suggests that demand is firm, and that might lead to higher inflation in the coming months.
Sterling is weaker as mounting political pressure on Theresa May is hurting the currency. The DUP, who are propping up Mrs May, have sent her a political warning in relation to her withdrawal agreement. Mark Carney, the head of the Bank of England, was speaking in front of the Treasury Select Committee and didn’t give too much away. The central banker declined to say if a ‘no-deal’ was more likely, and he also stated forecasts assume smooth transition.
Best Buy Co Inc (NYSE:BBY) and Target (NYSE:TGT) will be in focus today as both companies are due to release their third-quarter figures. Both retailers have made concerted efforts to reorganise their businesses, and put more focus on the online sales. Many traditional retailer have been struggling in recent years due to the rise in e-commerce, so today’s reports should be interesting.
We are expecting the Dow Jones to open 118 points lower at 24,899 and we are calling the S&P 500 down 12 points at 2,678.
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