Europe
Stocks are pushing higher into the close after US-China trade talks ended on an optimistic note. It was reported that Beijing will release details of the talks on Thursday, but a more recent report claims the release date might change. Traders are aware that some structural issues still persist, and that more issues need to be resolved, but the overall mood is positive.
Greggs (LON:GRG) announced solid figures and upped its forecast for the year. The firm said that total sales increased by 7.2% and annual underlying profit before tax is expected to be at least £88 million, and that compares to the previous forecast of £86 million. The group finished 2018 on a high note, and it started 2019 in a strong position. The share price hit an all-time high this morning and if the positive move continues it might target 1,500p.
Sainsbury's (LON:SBRY) revealed that total retail sales excluding fuel dropped by 0.4%, and like-for-like (LFL) sales excluding fuel fell by 1.1%. Grocery sales increased by 0.4%, and online grocery and convenience sales rose by 6% and 3% respectively. Clothing sales edged lower by 0.2%, and general merchandise sales dropped by 2.3%. The group blamed a ‘cautious’ consumer environment and a deliberate decline in discounting ahead of Black Friday for the poor performance. Retailers are in a difficult position these days, discounting has become so common, you fall behind if you don’t cut prices, but at the same time, promotions squeeze margins. The stock has been in decline since August, and if the bearish move continues it might target the 250p region.
Ted Baker (LON:TED) shares are higher after the fashion house confirmed that retail sales in the five weeks until early January jumped by 12.2%. Online sales increased by 18.7% and now account for more than a quarter of total revenue. Margins are tipped to remain in line with expectations despite discounting. The stock has rallied for the past month, and if the bullish sentiment remains, it might target the 2,000p region.
Taylor Wimpey (LON:TW) shares are in demand after the company issued a positive update ahead of its full-year figures next month. Total completions and total order book ticked up 3% and 9.2% respectively. Average selling price remained flat on the year as house prices in some parts of the country held steady, or in some cases fell. The firm has maintained its guidance for 2019, and that optimism has lifted the share price and the wider sector.
US
Equity markets have rallied on the back of the conclusion of US-China trade talks. We were told the negotiations ended on good terms, but we will have to wait a few days before additional announcements are made. It was confirmed that China intends to buy more US products, and that has added to the bullish sentiment.
The Federal Reserve will announce the minutes from the December meeting at 7pm (UK time). The statement at the press conference last month was a little on the hawkish side, and since then, some central bankers softened their stance. Last week, Jerome Powell, the head of the Fed, announced they will be ‘patient’ and ‘flexible’ in relation to future policy. James Bullard and Raphael Bostic issued statements that suggest the Fed should hold fire on further interest rate hikes.
FX
The US dollar index is a little softer today as dealers continue to be less fearful about the Federal Reserve with respect to hike interest rates in the near to medium term. The central bank has rowed back from its hawkish update in December, and the greenback is softer on the back of it.
EUR/USD is higher due to the dip in the greenback, and the eurozone unemployment report helped too. The jobless rate fell to 7.9%, and the previous report was revised down to 8%, from 8.1%. The unemployment rate is now at its lowest level in a decade, which bodes well for the region.
USD/CAD is in the red due to the softness in the greenback, and the strength in the Canadian dollar – due to the rally in the oil market. The Bank of Canada (BoC) kept interest rates on hold at 1.75%. The central bank lowered its growth forecast for 2019 to 1.7% from 2.1%, and the inflation rate was trimmed too, so the BoC might be holding tight for the foreseeable future.
Commodities
Gold is higher on the day, and the pullback in the greenback has helped the metal .The risk-on attitude of traders in light of the US-China trade talks has not helped gold’s cause. The metal has been in an upward trend since mid-August, and if the bullish move continues it might target the $1,300 region.
The Energy Information Administration report encouraged traders to take some profit on oil. The energy gave back some of the ground made after it was reported that oil inventories dropped by 1.68 million barrels, and that gasoline stockpiles surged by over 8 million barrels.
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