Stocks have sold-off severely this morning as traders are worried that US-China relations have deteriorated.
The arrest of Huawei CFO, Meng Wanzhou in Canada over the weekend has rattled investor confidence, and she could face possible extradition to the US. There is talk that Huawei might be have broken US sanctions in relation to Iran. US-China relations were on the mend after the G20 summit over the weekend, and now the arrest might have thrown a spanner in the works.
DS Smith (LON:SMDS) shares are in the red despite the company reporting a solid set of first-half results. Revenue increased by 15%, and profit before tax jumped by 27%. The group issued an optimistic outlook and confirmed the second-half of the year got off to a good start. The firm is considering sell-off its plastics business, and it believes the division could be worth up to $800 million. The interim dividend was nudged up by 14%, and that is a clear sign the group is confident of its ability to generate future earnings. The stock has been in decline since June, and if the negative move continues it might target 300p.
Ted Baker (LON:TED) issued a trading update, and group sales for the 16 weeks until early December dipped by 0.2% compared with the same period last year. The fashion house blamed the poor timing of deliveries for the relative under performance in the wholesale sector. Retail sales increased by 2.3% and online sales jumped by 18%. The share price sold-off severely on Monday over allegations of inappropriate behaviour by the firm’s founder and CEO, Ray Kelvin. Today, the group confirmed that Herbert Smith, law firm, are looking into the matter. The stock has been in a downward trend since March, and support might come into play at 1,250p.
The remote gambling association announced that firms will stop advertising during live sporting events. William Hill (LON:WMH), Paddy Power Betfair (LON:PPB) and GVC (LON:GVC) are in the red today.
Ferrexpo (LON:FXPO) announced a special interim dividend of 6.6 cents. The company confirmed that pellet premiums have remained at high levels in the first-half of 2018, and demand is tipped to be strong in 2019.
GBP/USD is largely unchanged today as traders are cutting through the political noise in relation to Brexit. It seems the possibility of the UK leaving the EU without a deal appears to have diminished, and that is why we are seeing stability in the pound.
Oil will be in play today as OPEC and partners will meet today, and there is talk of a production cut. The major oil producers must strike a balance in terms of price, as they want to put a floor under the market, but at the same time, if prices rally too much it could hurt demand, and vex President Trump. The Saudi’s have suggested a production cut that is smaller that the consensus estimate.
Kroger (NYSE:KR) will be in focus today as the company will announce their third-quarter results. Same-store sales have been weak recently, and the group’s tie up UK-based Ocado (LON:OCDO) should boost their online presence. E-commerce is becoming a bigger part of the industry and investors will want to see expansion in that area.
We are expecting the Dow Jones to open 447 points lower at 24,580 and we are calling the S&P 500 down 48 points at 2,652.
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.