European markets have traded sideways this morning, as investors look for direction in an uncertain environment. Matters are being muddied by concerns of a re-escalation in the Greek debt crisis, in amongst the upcoming European election concerns around potential political upheavals in Germany and France.
German Finance Minister Wolfgang Schaeuble has again adopted a tough line on Greece, saying that the country would need to leave the Euro zone if they were to get a cut in debt. Furthermore, Schaeuble has pursued the same line as the IMF to be “ruthless truth tellers” when he made comments that the real issue with Greece is not their debt, but in fact their competitiveness in a global marketplace.
While one could argue that this sort of rhetoric is not particularly constructive when it comes to sorting out a solution to what has been a long running issue, it does also open a potential option for Greece if the current impasse continues. Definitely a case of "be careful of what you wish for".
One of the biggest fallers on the FTSE100 this morning has been Smith & Nephew (LON:SN), as analyst forecasts for their full year results came in short. The medical equipment manufacturer reported a 7% drop in full year profits at $1.02bn, with management blaming slowing growth in China and the Gulf states. Despite this being the worst one-day performance for the stock since November, the Chief Exec. Olivier Bohuon was upbeat about market conditions for 2017 as Chinese growth comes back in line with expectations.
Also falling this morning have been miners such as Anglo American (LON:AAL) and Antofagasta (LON:ANTO) as investors take their profits. These stocks have been trading at 2-year highs with the rally in commodity prices, but seem to be running out of momentum despite gold making fresh highs, and copper looking to rally with upcoming supply disruptions. This seems to be symptomatic of the current environment of uncertainty, as investors are not looking to push their luck on profit running positions.
In the US, eyes will be on Twitter (NYSE:TWTR) as they release their Q4 earnings before the opening bell. A drop in earnings per share, from 16cents to 12cents, is expected despite a projected increase to revenue. Active users are seen to be steadily increasing, and analysts are hoping for what they are coining as a “Trump bump”. This term is based on the fact that, with Trump incessantly posting about policy, more people outside of the normal teenager spectrum will be interacting and engaging with the site.
Also reporting today will be Coca-Cola (NYSE:KO) with their Q4 earnings, in what has been a turbulent year in beverage sales. Analysts are forecasting this will be the 7th straight quarter of YOY declines for both sales and profit, with revenue expected to come in at $9.14bn, but despite this, price targets are averaging at $44.68, over $2 higher than yesterday’s closing price.
The Dow Jones 30 is expected to open up 4 points at 20,058
The S&P500 is expected to open flat at 2,295
Disclosure: CMC Markets is an execution only service 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.