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Trade Woes Resurface, Boohoo Post Strong Q1 Figures

Published 12/06/2019, 13:44
Updated 03/08/2021, 16:15

Trade tensions have ticked up again between the US and China, and that has prompted a decline in European stocks. President Trump has defended his use of levies, and the threat of higher levies, as a way of trying to rebalance the trading relationship with China. Beijing have reiterated their willingness to hold a firm line against the US. The standoff is back at the forefront of dealers’ minds and it has prompted some investors to take some money off the table.

Mario Draghi, the head of the European Central Bank, called for total-factor productivity to be boosted in order to reduce vulnerabilities in the currency bloc. Given its current monetary policy, the euro area is likely to just plod along, and some traders don’t have much hope for the new targeted liquidity scheme that will start in September.

Boohoo.com (LON:BOOH) shares had a choppy start to the session even though the online fashion house posted a solid set of first-quarter numbers. Revenue for the first three months surged by 39%, and keep in mind the stockbroking firm Numis, where expecting an increase of 38%. Boohoo maintained its full-year outlook, as it anticipates sales to grow between 25% and 30%.

Gross margins were 55%, largely unchanged on the year, and in line with forecasts. Net cash jumped by 28%. There was strong sales growth across all regions. When you consider that ASOS (LON:ASOS) and Ted Baker (LON:TED) have been struggling recently, Boohoo’s update seems all the more impressive.

Inditex (MC:ITX), had a solid first-quarter too as sales and net profit increased by 5% and 12% respectively. The fashion maintained its full-year outlook of between 4% and 6% sales growth on a like-for-like basis. Gross margin ticked up 6% to 59.5%, and that was partially helped by the launch of Zara online in Brazil, and the company plans to continue its expansion into online sales. E-commerce is putting major pressure on high-street retailers, a push for online sales should benefit the firm.

Pendragon (LON:PDG) shares slumped this morning after the company issued a profit warning. The group registered a loss last year, and it now expects to make a loss this year too. The group cited slimmer margins on premium cars, and higher labour costs, and a tougher market in general, for the profit warning.

British American Tobacco (LON:BATS) announced the business performed well in the first-half, and that it expects to have a solid performance for the full-year. The group anticipates that annual revenue on a constant currency basis will be at the mid-to-upper end of its guidance, and operating profit is tipped to be in line with forecasts. The group hopes to see an increase in vaping products in the latter-half of the year. Despite the positive update, the stocks is in the red.

EUR/USD hasn’t moved much today as Spanish CPI held steady at 0.9%, meeting forecasts.

Beyond Meat (NASDAQ:BYND) will be in focus later after the stock lost over 25% yesterday. The severe sell-off was triggered by a downgraded from JPMorgan (NYSE:JPM), and now that one Wall Street bank has lowered its rating for the stock, others might see others follow suit.

We are expecting the Dow Jones to open 48 points lower at 26,000 and we are calling the S&P 500 down 5 points at 2,880.

DISCLAIMER: CMC Markets is an execution only 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.

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