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Stocks Rally As Health Fears Fade; TUI Takes Off; Sterling Firmer

Published 11/02/2020, 11:58
Updated 03/08/2021, 16:15

Sadly the coronavirus crisis continues to rumble on, but it seems the rate of infections is slowing, so traders have taken that as a positive sign. Some businesses in China are going back to work, and it was reported the authorities are encouraging firms to meet their production forecasts.

Dealers are starting to question the initial reaction to the health crisis. Those brave enough are stepping back into the market as they feel the sell-off was overdone at the start of the situation.

Tui AG (LON:TUIT) shares have soared as the company lifted its guidance. The travel company now expects full-year core earnings to be between €850 million and €1.05 billion. Keep in mind that only two months ago the firm cautioned the costs associated with the Boeing (NYSE:BA) 737 Max situation could severely hurt earnings. The demise of Thomas Cook benefitted TUI as holiday makers sought out secure and stable travel firms. TUI saw ‘improved bookings trends’ and should business remain robust the firm expects high single digit growth in annual revenue, while the old guidance was for mid to high single digit growth.

Daimler (LON:0NXX) posted disappointing results but the stock is higher this morning seeing as the company is gearing up for a move into the electric vehicle industry. In the fourth-quarter, the company registered a net loss of €11 million, which was a colossal drop from the €1.64 billion profit one year ago, while equity analysts were expecting a profit of €776.7 million. The global auto sector is slowing down as consumer demand is tapering off. Daimler are investing heavily in electric vehicle technology, while the company incurred charges in relation to diesel emissions. The firm slashed its dividend by 72% to 90 cents in a bid to conserve cash, but it predicts that full-year earnings next year will be ‘significantly’ higher that 2019’s results.

Ocado (LON:OCDO) confirmed the full-year loss was £214.5 million, which was a huge jump compared with the loss of £44.4 million last year. The group’s exceptional charges were £94.1 million, but the vast majority of that was related to a fire at its Andover facility last year. Putting to one side the Andover incident, the business is performing well as retail revenue grew by 10.3%, while fees invoiced to international partners jumped by 38%.Ocado’s outlook is robust too as retail revenue is tipped to grow by 10-15%.

GBP/USD was given a nice lift by the preliminary UK GDP reading. The report showed economy grew by 0.0% on a quarterly basis in the fourth-quarter, meeting forecasts, while the third-quarter reading was revised up to 0.5% from 0.4%. The update showed 1.1% growth on an annual basis in the three month period, topping the 0.8% forecast.

Western Union (NYSE:WU) shares will be in focus as the company will announce its fourth-quarter results today. The stock is eyeing its all-time high so the figures will be of particular importance. The third-quarter update in November was mixed as the revenue narrowly missed forecasts, while EPS were 49 cents, topping forecasts by 1.4%.

We are expecting the Dow Jones to open 90 points higher at 29,366 and we are calling the S&P 500 up 9 points at 3,361.

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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