The North Korea story appears to have had a more positive effect on Asia markets as we head into the weekend, with a strong finish across the board. This shouldn’t be too much of a surprise given their geographical proximity, however European markets don’t appear to be too enthused one way or the other.
With having to absorb the Trump tariffs story and the various carve-outs, as well as the unexpected announcement of a potential historic meeting between the US president and North Korea’s Kim Jong Un, investors have a lot to contend with ahead of the weekend, as investors try and stay one step ahead of the US president’s predilection for unpredictability.
The various cross winds are likely to keep investors cautious, with commodity prices falling sharply across the board on the tariff announcements , while today’s US employment report which could well give further clues as to the direction of US monetary policy in the coming months.
These cross winds have seen markets in Europe open fairly subdued this morning on what looks set to be a fairly positive week, however on the data front there does appear to be rising evidence that the European economy which everyone has been so enthusiastic about in recent months is starting to splutter a little, if this morning’s data from Germany and France is any indication.
Industrial production in both Germany and France slipped back sharply against consensus in January with declines of 0.1% and 2% respectively.
In company news UK satellite company Inmarsat (LON:ISA) is one of the worst performers after reporting that it would be cutting its dividend due to uncertainty over future cash flow from its US 5G operations. The underlying numbers were fairly positive with Q4 beating market expectations, coming in at $353.7m.
The company also announced that it would be investing additional money into the growing in-flight Wi-Fi market. While the cut in the dividend to $0.2c a share is disappointing the dividend yield still remains at a fairly healthy 5%, and reflects a management adopting a responsible outlook to a more challenging environment. Even so the fact that the share price has halved in the last 12 months should be a significant concern for shareholders as the share price languishes just above levels last seen in 2012.
In the US, the news that Toys R Us is preparing to liquidate its US operations is likely to have an impact on other companies in the sector when US trading opens later today. Mattel (NASDAQ:MAT) and Hasbro (NASDAQ:HAS), both large US toy manufacturers saw their share prices drop sharply after the bell last night.
This seems rather a strange reaction given that neither of these companies owns a significant amount of real estate, and as such will still be able to shift their stock through other retailers. Toys R Us appears to have suffered from the Amazonification of the retail space and its inability to adapt its shopping experience to compensate for that.
Investor’s main focus today is on today’s US employment report and in particular the wages data. This is likely to be the primary driver of any significant move today. If wages are able to hold up near the 3% level then speculation about the prospect of 4 US rate rises today is only likely to increase.
Dow Jones is expected to open 5 points lower at 24,890
{{166|S&P500}} is expected to open unchanged at 2,738
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