European equities are gloomy this morning as Brexit still hangs over the markets. Theresa May’s withdrawal agreement was voted down yesterday, which wasn’t a huge surprise. The Spring Statement later today is likely to play second fiddle to the vote on whether the UK should leave without a deal ,and that will take place this evening. The UK has already made it clear, should there be no a deal scenario, it would waive tariffs on 87% of EU imports.
Inditex (LON:0QWI), the owner of Zara, released mixed full-year results. Sales rose by 3% to €26.1 billion, and earnings before interest and tax came in at €4.36 billion, which undershot the consensus estimate of €4.43 billion. Online sales jumped by 27%, and digital sales now accounts for 14% of the overall revenue. It is encouraging to see the group is embracing technology as that’s where the growth is going to be in the next few years. Like-for-like sales growth was 4%, and the company expects it to be between 4% and 6% this year. The stock gapped lower today and if it remains below the 200-day moving average at €26.13, its outlook should be negative.
Balfour Beatty (LON:BALF) shares are slightly higher today after the company reported a 9.7% increase in full-year profit. The group has been undergoing a tough restructuring scheme for a number of years, and it is clearly paying off. Balfour has been more selective in the contracts they take on. The group confirmed that margins in US and UK contracts improved in the second-half on the year – and the company needs to keep moving in this direction. The order book is up 11%. The stock has been pushing higher since December, and if the bullish move continues it might target the 316p area.
Standard Life Aberdeen (LON:SLA) confirmed that net outflows increased to 24.3% to £40.9 billion last year. Assets under management and administration dipped by 9.3%, and pre-tax profit was largely unchanged. The group’s joint CEO, Martin Gilbert, will be stepping down in order to bring in a simpler management structure.
Morrisons (LON:MRW) revealed an 8.55% increase in full-year profit to £406 million, largely in line with equity analysts’ forecasts. The group’s same store sales at supermarkets increased by 1.5%, and the wholesale division registered a 3.3% jump. The firm revealed its third special dividend in a year, and this is a clear sign the group’s restructuring programme paid-off. The prospect of tariffs on EU imported goods in the event of a no deal Brexit is weighing on sentiment a little.
GBP/USD is higher as traders look ahead to the vote in the House of Commons today, where UK law makers are widely expected to vote down the possibility of a no deal Brexit. Despite all the political noise recently, the pound’s upward trend versus the US dollar since December is still intact.
EUR/USD is a little higher due to the softer US dollar. Eurozone industrial output on a monthly basis jumped by 1.4% in February, topping the 1% forecast, and that helped euro sentiment.
Williams-Sonoma (NYSE:WSM) will be in focus today as the company is due to announce its fourth-quarter sales. The company’s third-quarter revenue undershot expectations, and the fourth-quarter outlook was lowered, and dealers will be a little on the cautious side today.
We are expecting the Dow Jones to open 1 point higher at 25,555 and we are calling the S&P 500 up 4 points at 2,795.
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