Equity markets in Europe had a cautious start, but have pushed higher throughout the trading session, as optimism about the US-China trade situation has fuelled buying.
Yesterday, President Trump claimed that a trade deal with China might be struck ‘sooner than you think’. We have heard this sort of commentary before, and it hasn’t always worked out, but the mood is upbeat nonetheless. President Trump has a habit of changing his tune when it comes to China, so some traders might remain sceptical of the remarks. China’s ministry of commerce said companies have made significant purchases of US soybeans as well as pork, and this added to the bullish move.
Mitchells & Butlers (LON:MAB) are performing well considering the pub sector has had a tough time recently. On an annual basis, total like-for-like sales jumped by 3.6%. Food sales outperformed as they saw a 3.5% increase, while drinks sales increased by 3.3%. The firm expects full-year operating profit margin to be broadly in line with last year’s level, despite cost pressures. The stocks is up over 1%
Pearson (LON:PSON) shares sold-off today after the group cautioned that it now expects full-year adjusted operating profit to be at the lower end of the £590 million - £640 million guidance. Trading at the US higher education coursework division was weaker than expected, hence why the guidance was trimmed. The group has undergone a restructuring programme in recent years, and today it confirmed it is on track to deliver more than £330 million of annualised cost savings. The net debt position is tipped to be in line with 2018’s level. It isn’t ideal that earnings are tipped to be at the bottom end of their guidance, but the group’s still expects to make roughly £600 million, which would still be a colossal improvement from the £2.5 billion loss that was registered in 2017.
Imperial Brands (LON:IMB) lowered its full-year outlook as there has been a backlash against vaping in the US. The firm now anticipates revenue to grow by 2%, while the previous guidance was for 4% growth. In some countries, cigarette sales have been in decline, so major tobacco firms has been ramping up their investments in alternative products like vaping, but given the recent adverse reaction to vaping, traders are fearful the sector will be squeezed. Imperial Brands as well as British American Tobacco (LON:BATS) shares are in the red this morning.
GBP/USD is in the red again as continued political uncertainty in relation to Brexit is weighing on the currency pair.
Carnival (LON:CCL) will be in play today as the group will reveal its third-quarter results. Traders are expecting EPS to be $2.52. The cruise operator lowered its full-year guidance in recent months, as travel restrictions in relation to Cuba were cited for the lowered forecast. There are concerns that US consumer confidence is slipping so the outlook will be crucial.
We are expecting the Dow Jones to open 70 points higher at 27,040 and we are calling the S&P 500 up 5 points at 2,990.
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