European equity markets are higher this morning after a strong finish in Asia overnight. The historic meeting of the leaders of North and South Korea has given a boost to the geopolitical mood – which was been tepid recently. The dip in the pound on the back of the softer-than-expected UK GDP numbers has given a boost to the FTSE 100.
RBS (LON:RBS) shares are in the red after investors continue to fret about the looming fine from the US Department of Justice. First-quarter profits jumped to £792 million, from £259 million last year, and the consensus was for £319 million. Cost cutting and declining legal bills were attributed to the surge in profits. The banks’ balance sheet has strengthened as the common equity tier (CET1) ratio rose to 16.4%, up from 15.9% .This highlights how much the bank has come on since the dark days of the credit crisis. RBS won’t be able to restart paying a dividend until after the DoJ fine has been paid, and until then the stock is likely to be held back.
Shares in easyJet (LON:EZJ) are up 0.3% at 1590p, after RBC raised its price target for the stock to 1800p, up from 1700p. The share price of the airline has been in an upward trend since October 2016, and there aren’t any signs the bullish trend will come to an end.
Yesterday Carpetright (LON:CPRC) stated they avoided going into administration after the landlords agreed to enter into a company voluntary arrangement (CVA) which will see 300 job cuts and the closure of 92 stores. This has given the company some much needed breathing space. A CVA won’t solve all Carpetright’s problems but in the near-term it is likely to boost investor confidence.
EUR/USD has fallen to a three month low after Mario Draghi, the President of the European Central Bank, gave a slightly cautious update yesterday. Mr Draghi talked about how the economic momentum in the region is cooling, and traders are still concerned about this.
GBP/USD has sold-off after the UK growth rate cooled in the first-quarter to 1.2% on an annual basis, down from 1.5% last year, while economists were expecting growth of 1.4%
At 1.30pm (UK time) the US will release the first-quarter advance GDP reading, and the consensus is for 2%, and the previous reading was 2.6%.
We are expecting the Dow Jones to open down 45 points at 24,277 and we are calling the S&P 500 up 2 points at 2668.
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