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Stocks Steady As Trade Tensions Simmer; Next In Vogue After Raised Outlook

Published 25/09/2018, 12:13
Updated 03/08/2021, 16:15

Stocks are marginally higher this morning as traders remain on edge about the state of global trade. Beijing have accused the US of ‘trade bullyism practices’ and said their practices are the ‘greatest source of uncertainty’ for the global economy. The harsh words from the Chinese government are unlikely to be well received by President Trump, and the trade spat could be dragged out. Dealers pay more attention to tariffs than statements, but verbal attacks could bring about more tariffs.

Next shares (LON:NXT) are higher today after the company raised its full-year guidance. First-half profits rose by 0.5% to £311.1 million, which was below the consensus estimate of £315.3 million. The high street division saw profits fell by 23% and on-line profits jumped by 21%. The company performed better-than-expected in August and early September thanks to the unusually warm summer. The nature of the retail sector is changing, and Next are adapting to the changes, as store sales now account for less than half of revenue, and given the growth in e-commerce, we should see further challenges on the high street. The firm confirmed it is well prepared for a ‘no-deal Brexit’ scenario, and that is reassuring for investors. The stock gapped higher this morning, and while it holds above the 200-day moving average at 5,289p, its outlook could be positive.

Glencore (LON:GLEN) shares are higher this morning after the company expanded its share buyback scheme by $1 billion, and the programme will now run until February 2019. Morgan Stanley (NYSE:MS) trimmed their price target to 390p from 400p, but it couldn’t hold back the positive move.

Just Eat (LON:JE) is likely to remain under pressure at it was reported that Amazon (NASDAQ:AMZN) are considering buying Deliveroo. At the back end of last week, Just Eat’s share price took a knock when it was revealed that Uber were interested in acquiring Deliveroo. Any consolidation in the industry could put pressure on Just Eat’s business.

EUR/USD is largely unchanged on the day as it has been a quiet morning in terms of economic announcements. The only update of any importance was the German wholesale price index report, and on an annual basis it ticked up to 3.8% in August, and the July report was report was revised from 3.5% to 3.6%. The tick up in wholesale prices could bring about higher inflation down the line as wholesalers are likely to pass on their higher prices.

At 3pm (UK time) the US Conference Board consumer confidence report will be released, and traders are expected a reading of 132, down from 133.4 in August.

We are expecting the Dow Jones to open up 38 points at 26,600 and we are calling the S&P 500 up 3 points at 2,922.

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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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