European equity markets are a little higher this morning as traders monitor the G20 summit. Trade talks between the US and China will be in focus as tensions have moved up a notch in recent months.
The dispute has also taken on a technological dimension in relation to the US ban on Huawei products, and Beijing are keen for the Trump administration to lift the limitations. Donald Trump will discuss trade with China’s Xi Jinping tomorrow, and that is likely to be the main event of the G20 as far as investors are concerned. A speedy solution to the trade standoff is unlikely in light of how entrenched both sides have become, but the meeting might pave the way an improvement in the relationship.
An investment consortium comprised of the family that own Lego and Blackstone (NYSE:BX) Group and CPPIB, have made a bid for Merlin Entertainments (LON:MERL), and the offer sent the shares soaring. The bid values Merlin at approximately £5.9 billion. Many international travel firms have complained about a fragile consumer market, and some perspective British holiday makers might be holding off on international trips on account of Brexit uncertainty, and disruption in the airline sector might be factor too. It is possible the likes of Merlin might benefit from the increase in staycations, can people might spend more money at home.
House builders like Berkeley Group (LON:BKGH), Taylor Wimpey (LON:TW) and Redrow (LON:RDW) are higher this morning after Boris Johnson said he would implement an emergency budget in the case of a no-deal Brexit, and that would include a reduction in stamp duty. The house builders have cooled in terms of share price movement in the past year or two as there is a belief that the boom times are over for now, and the announcement from Mr Johnson prompted some buying.
Costain Group (LON:COSG) shares slumped today after the company warned that full-year revenue would be below it previous guidance, and that was on account of delays to contracts. The company said that first-half trading has been in line with expectations, and the order book jumped by 13.5%.
GBP/USD had a positive reaction to the announcement the UK economy grew by 1.8% on an annual basis in the first-quarter. The reading was in line with forecasts.
EUR/USD was given a nudge higher by the French inflation report, and the CPI reading jumped to 1.4% in June, which easily topped forecasts of 1.1%. The eurozone headline CPI and core CPI rates were 1.2% and 1.1% respectively. In the first-quarter, the Spanish economy grew by 2.4%, meeting forecasts.
Nike (NYSE:NKE) will be in play today as the company posted mixed fourth-quarter results after the closing bell last night. Adjusted EPS came in at 62 cents, which undershot the 66 cents forecast. Revenue for the period was $10.18 billion, which marginally exceeded forecasts. Sales in China jumped by 22%, which is encouraging to see as it is an expanding market. The group said that profit margins were squeezed because it ramped up investment in regards to selling directly to consumers, and bypassing wholesalers. In the long-run, this strategy should pay-off as going directly to customers should help profit margins.
We are expecting the Dow Jones to open 95 points higher at 26,620 and we are calling the S&P 500 up 9 points at 2,933.
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