European stock markets are higher this morning as there are positive noises coming out of China in relation to the trade situation. A spokesperson for China’s ministry of commerce, said that an escalation in trade tensions is not good for China, the US, or the rest of the world. Beijing reiterated its opposition to a trade war, and it will not discriminate against foreign firms operating in China, but at the same time it reminded the US it has ample retaliatory measures. The largely hopeful tones of the update from China has lifted market sentiment, and that sparked buying this morning. US-China relations have been volatile recently, but for now there is a sense that things are heading in the right direction, and that has coaxed some traders back into the market.
Micro Focus shares sold-off sharply this morning after the company lowered its revenue outlook. The firm now expects full-year revenue to be between 6% and 8% below the original guidance, and keep in mind, the previous guidance was for a decline of between 4% and 6% of the initial forecast. The group cited soft sales execution, and an uncertain economic backdrop for the ‘disappointing trading performance’.
Hays shares are lower today even though the company posted decent figures. Full-year net fees increased by 4.8% and pre-tax profit for the year ticked up by 3.2%. The recruitment group expects headcount will creep up, but the growth rate in the first-quarter in 2020 is expected to be below that of 2019, and traders are viewing that as a cautious sign. The UK and Germany are big markets for Hays and trading in those regions are ‘tougher’, and there are ‘increasing signs of reduced business confidence’ in the regions, and that has rattled investors.
Homeserve (LON:HSV) has been upgraded by UBS to buy from neutral, and the bank raised the price target to 1,350p from 1,050p.
EUR/USD is largely unchanged this morning as political optimism in Italy, and respectable unemployment data in Germany helped the euro tread water. The jobless rate in Europe’s largest economy held steady at 5%, meeting forecasts, but the recession chatter is circulates.
Best Buy will be in focus as the company will post its second-quarter results today. In May, the group revealed solid quarterly figures as EPS topped forecast, while revenue matched the consensus estimate. Today’s guidance will be closely watched, and keep in mind, in May the group said it expects full-year EPS to be between $5.45 and $5.65. Best Buy are performing well in terms of store sales and online sales, and digital sales now account for over 15% of total revenue, and the ramping up of e-commerce should stand to the firm in the long-run.
We are expecting the Dow Jones to open 234 points higher at 26,270 and we are calling the S&P 500 up 27 point at 2,914.
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