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Positive Trade Sentiment Circulating; Spirent Jumps

Published 13/01/2020, 11:20
Updated 03/08/2021, 16:15

Equity market sentiment in Europe this morning is positive as traders are looking ahead to the signing of the first phase of the US-China trade deal on Wednesday. The largest economies in the world brokered phase one of the trade agreement at the back end of 2019, and it will be made official in two days’ time. International trade was a dominant theme of last year, but the US-China trade story is far from over seeing as the second phase of the trade deal is likely to be much trickier to achieve, as it will cover topics like intellectual property rights. Beijing can play the long game, so they are unlikely to concede too much to President Trump.

Spirent Communications (LON:SPT) issued a positive trading statement, hence why the stock is showing double digit percentage gains this morning. The company confirmed that annual revenue increased by 5.5%. Full-year adjusted operating profit is expected to be in the region of $91 million and $93 million, while the previous guidance was $77.1 million. Today’s update was light on detail but it sent the stock higher, and should the bullish move continue it might retest the record-high that was set earlier this month.

William Hill (LON:WMH) shares got off to a good start this morning after the company said that full-year operating profit will be in the region of £143 million and £148 million – which would be above analysts’ forecasts. The gaming group cited a strong performance at the sporting division for the upbeat forecast. The restructuring of the retail business has paid off as the division is tipped to deliver earnings that will exceed the previous guidance. On a slightly negative note, the US operation is anticipated to breakeven, while the old guidance was to produce a profit of $0-$20 million. The US has recently opened up in terms of regulation so many European companies are expanding into the market. Groups like William Hill will need to have successful US operations to counteract the more regulated UK market. In other news, Ruth Prior intends to step down as CFO.

Ferrexpo (LON:FXPO) revealed mixed update today as full-year production slipped by 0.8%, but a 16% increase in prices offset the production output. The stock fell to a three-year low in October, but since then we have seen a modest rebound.

Ted Baker (LON:TED) shares have been hit by a broker downgrade as RBC lowered its outlook to underperform from sector perform, and the price target was lowered to 300p from 440p.

GBP/USD is in the red this morning as chatter about an interest rate cut from the Bank of England (BoE) has increased following the release of several UK economic reports. It was estimated that UK GDP contracted by 0.3% in November on a yearly basis. Industrial production and manufacturing production fell by 1.2% and 1.7% respectively. A number of BoE policy makers have expressed dovish views recently, and in light of today’s reports, that speculation of an interest rate cut has increased.

We are expecting the Dow Jones to open 112 points higher at 28,935 and we are calling the S&P 500 up 12 point at 3,277.

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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