Europe
The rally in the euro has dented eurozone equity markets. The European Central Bank (ECB) kept rates unchanged, but the press conference that followed showed that some members of the ECB are a little more hawkish than others, and this played a role in the decline of the DAX and CAC 40.
Renishaw (LON:RSW) are down for the second day in a row. Yesterday the company announced the founder and CEO David McMurty will be stepping down, and will be replaced by William Lee. Today the business revealed a 73% jump in first-half profits and the company stated it expects full-revenue to be in the region of £575 million to £605 million – which would be more than double their first half-revenue. The stock is down 14.5% today, but reached an all-time high on Monday so with wider picture is positive.
Kier Group (LON:KIE) have been in the news a lot recently as they took over some of the contracts Carillion were working on. The construction group has not been without its own problems in recent years, but today it assured investors that it has its debt level under control. This announcement boosted the share price, and this could be the beginning of a wider bounce back in the stock.
Smith & Nephew (LON:SN) shares are up 3.9% at 1290p after JPMorgan (NYSE:JPM) upgraded the stock to overweight from neutral, and listed their share price target to 1411p from 1369p. During the week the company stated it does not expect the changes to US taxes to be material, and that their effective rate will come down.
US
American markets are higher as they are being helped along by the soft US dollar. The relative weakness in the US markets in the past 24 hour hours has given some traders an opportunity to get long the market. The Dow Jones, S&P 500 and Nasdaq 100 are all in positive territory today.
Caterpillar (NYSE:CAT) shares have been hit by profit taking as the stock is in the red despite the stronger than anticipated results. Earnings per shares (EPS) came in at $2.16 and analyst were expecting $1.79, revenue was $12.9 billion and the consensus was for $11.98 billion. The strong results were overshadowed by the $2.4 billion charge relating to the new tax laws in the US, but will be beneficial in the long run. The stock down 1.4% today but has been in a strong upward trend for two years, so may see fresh buyers enter the fold.
Shares in 3M (NYSE:MMM) have hit an all-time high today after the company posted EPS of $2.10, which easily topped the forecasts of $2.03. The company raised its full-guidance too, as it now expects annual EPS to be in the range of $10.20 to $10.70, which was up from the previous guidance of between $9.60 and to $10. 3M will also benefit from the changes to the US tax system, and it now expects the effective rate to fall to 20%-22%, down from 26%-27%.
FX
EUR/USD traded above 1.2500 for the first time since December 2014 after the ECB kept their policy unchanged. Mario Draghi, expressed concern about the strength of the euro as it could hamper growth. Mr Draghi left the door open to additional monetary easing, while hawkish members of the ECB wanted to outline an end date for the bond buying programme and that helped the single currency move higher. The continued sell-off in the US dollar has also played a role in the euro’s rally.
GBP/USD is driving higher on the back of the weak US dollar and the currency pair has reached yet another new 19 month high. The UK revealed a slowdown in sales across retailers and wholesalers as the Confederation of British Industry (CBI) realised sale report dropped to 12 from 20 in December. Traders shrugged the report off as it was in line with estimates, and the bullish trend remains intact.
Commodities
Gold has hit its highest level since August 2016 as the continued weakness in the US dollar making the metal more attractive. Gold’s medium term upward trend fits in with the wider positive trend that began in December 2015. The momentum s with the bulls, and it may target 1375 – the high from July 2016.
WTI and Brent Crude both registered new 3 years highs before turning lower as profit taking pushed the markets lower. The energy market has been strong in recent months, and Saudi Arabia are floating the idea of extending the coordinated production cut beyond 2018 ,and that has the potential to keep the bullish sentiment alive in the market.
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