European equity markets have rallied this morning on the back of the Fed’s update last night. The US central bank kept rates on hold, but left the door open to rate cuts later this year. Some central bankers believe the case for a more accommodative monetary policy ‘has strengthened’, and that was the signal that buyers were looking for going into the meeting.
The bullish mood as spilled over into Europe this morning, and dealers are now looking ahead to the Bank of England (BoE) announcement at 12pm (UK time). The BoE is expected to keep policy on hold, and since the Brexit situation is still ongoing, the central bank will be restricted in what it can signal, as a lack of political clarity continues.
Dixons Carphone (LON:DC) shares have slumped after the firm confirmed that full-year underlying pre-tax profit slumped by 22%. Dixons warned the mobile division will make a ‘significant loss’ in the year to come, but it predicts that the division will at least break even within two years. The group is clearly feeling the pressure as it will accelerate its cost reduction plan. The final dividend was cut by 33%. The net debt position increased by 6.4%.
Dunelm (LON:DNLM) shares hit their highest level in three years after the group raised its full-year profit guidance, and keep in mind the group upped its earnings outlook in April. The retailer managed to increase store like-for-like sales in the past few months, which is impressive as other firms on the high street are finding trading tough. Dunelm continues to focus more on online sales as e-commerce is on the rise across the board. Not many retailers are lifting their guidance these days, and it shows that Dunelm are a cut above the rest.
GBP/USD has been helped by the drop in the greenback. In May, UK retail sales dropped by 0.5% on a monthly basis, it was in line with economists’ forecasts. The report which strips out fuel sales, showed a 0.3% decline. This is worrying as it underlines weak consumer confidence, and the announcement put a small bit of pressure on the pound. Currency traders will be keeping an eye on the BoE update.
EUR/USD has rallied today, also on the back of the weaker greenback. Luis de Guindos, the vice president of the European Central Bank (ECB) said that rate cuts are only a possibility for now. It is clear the ECB are keeping their options open with regard monetary policy.
Darden Restaurants (NYSE:DRI) will report their fourth-quarter numbers before the US open. The stock has been driving higher since July 2014, and if the bullish run continues it night retest the $125 region. The third-quarter results were well received as both the earning per share and revenue topped forecasts. With US earnings easily exceeding the inflation rate, workers have a healthy disposable income, and that helps the restaurant group.
Kroger (NYSE:KR) will reveal its first-quarter figures today. The group in is the process of rebooting itself. Plans to overhaul stores are in place, and investment has been ramped up to tackle Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT). The group’s agreement with Ocado (LON:OCDO) is clearly aimed at raising its online profile.
Slack (NYSE:WORK) will do a direct listing on the New York Stock Exchange today. This is an alternative to an IPO, and it essentially means the shares of the company’s private investors will become available for public trading. There is talk the firm will be valued at $16 billion. The group posted a loss of $138.9 million last year, and this year’s loss is tipped to narrow to $180 million this year.
We are expecting the Dow Jones to open 216 points higher at 26,720 and we are calling the S&P 500 up 26 points at 2,952.
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