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Stocks Dip Amid China Crisis; Irish Banks Tumble Post-Election

By CMC Markets (David Madden)Stock MarketsFeb 10, 2020 12:33
Stocks Dip Amid China Crisis; Irish Banks Tumble Post-Election
By CMC Markets (David Madden)   |  Feb 10, 2020 12:33
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Coronavirus concerns are weighing on European equity markets as the Chinese authorities have confirmed the death toll has reached 908. The bullish run that lasted most of last week seems like a distant memory. The surge in stocks was driven by the policies of the Chinese authorities, so now the positive sentiment is fading. The deepening health crisis is chipping away at market confidence. In London, stocks that are connected to China are under pressure. Mining, energy as well as travel stocks are in the red. German politics received a shock today when Annegret Kramp-Karrenbauer confirmed she will quit as leader of the Christian Democratic Union, and she will not be putting herself forward to replace Angela Merkel as Chancellor. The applecart has been upset in Europe’s largest economy, at a time when the Continent needs stability.

Bank of Ireland Group PLC (LON:BIRG) as well as AIB Group PLC (LON:AIBG) are feeling the pain this morning following the general election held in Ireland over the weekend. An exit poll points to no clear winner, in fact the three largest parties achieved roughly the same percentage of the vote, so forming a new government is likely to be tricky. Fianna Fáil and Fine Gael have dominated Irish politics for decades. Both parties are largely centrist, but Fine Gael would be deemed to be to the right of Fianna Fáil. Traders have been spooked by the rise of left-wing party, Sinn Féin. Dealers are fearful the next Dublin administration might not be as pro-business as previous governments, as it is likely to include some sort of deal with Sinn Féin.

Politics in Europe has become more fractured in recent years and as WB Yeats wrote over a century ago, ‘the centre cannot hold’, so some countries have taken a right turn, while Ireland appears to be moving left of centre. Ulster Bank, a subsidiary of Royal Bank of Scotland (LON:RBS), is also lower on the session.

NMC Health PLC (LON:NMC) shares have seen major volatility in recent months as the group’s financial health was called into question. An independent review of the firm’s accounts is being carried out. This morning the company has confirmed it has received highly preliminary approaches KKR as well as GK Investment Holdings. There is only the possibility of an offer being made, but the stock has jumped nonetheless. A bidding war might see other potential suitors step forward as investment firms often have their interest tweeted when rivals seek to snap up distressed assets.

Intu Properties (LON:INTUP) have confirmed they have plans to raise equity at the end of the month when its results will be posted. It was reported that Link Real Estate a Hong Kong listed firm will become a shareholder in the struggling property group. Intu have been selling off assets in a bid to beef up its balance sheet, and a potential deal would help bring stability to the group. The rise of online shopping has hammered the likes of Intu, which is a large factor why the share price has dropped by over 95% in five years.

GBP/USD as well as EUR/USD are higher this morning thanks to a pullback in the greenback – which rallied on Friday on the back of the strong US jobs report. The Italian industrial production report showed a 2.7% fall in December, undershooting the 0.5% growth forecast.

Lowe’s (NYSE:LOW) will be in focus today as the group will announce its fourth-quarter numbers. The group posted impressive third-quarter results in November as EPS jumped by 35.6% on an annual basis to $1.41, topping the $1.35 consensus estimate. Revenue for the three month period missed forecasts fractionally, but the full-year earnings guidance was upped.

We are expecting the Dow Jones to open 52 points lower at 29,050 and we are calling the S&P 500 down 4 points at 3,323.

"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. "

Original Post

Stocks Dip Amid China Crisis; Irish Banks Tumble Post-Election

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Stocks Dip Amid China Crisis; Irish Banks Tumble Post-Election

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