Stock markets are strong this morning as US-Iran tensions have faded. Yesterday afternoon President Trump issued a statement in relation to Iran, and he made it clear that he wasn’t pushing for an all-out war with the regime, which was a weight off traders’ minds. The strong finish in New York last night prompted buying in Asia overnight, so now the bullish sentiment has reached Europe. The US and Iran are still at odds with each other, but as long as a conflict doesn’t seem to be on the horizon, the feel good factor is likely to last.
It’s the same old story at Marks and Spencer Group PLC (LON:MKS) as the update showed the food department continues to be the start performer of the group, while the clothing and home operation is still a drag on the overall business. In the timeframe, which included the all-important Christmas season, like-for-like (LFL) food revenue increased by 1.4%, while the clothing and home business saw a 1.7% fall in LFL revenue. The group needs to reform or restructure the clothing business as the food operation can’t be expected to carry the operation forever. The full-year guidance was kept unchanged, but that could win round traders as the stock is down 10%.
Tesco (LON:TSCO) also published a trading update too. For the 19 week period until early January, group LFL sales slipped by 0.9%. In the time period, the UK and Ireland operation saw a 0.4% increase in revenue on a LFL basis, while the Booker division saw sales rise by over 4%. Central Europe and Asia posted falls of 10.3% and 1.6% respectively. The Group’s CEO, Dave Lewis, described the sector as ‘subdued’ but on a slightly more upbeat note, he said Tesco ‘performed well’ given the state of the sector.
Mitchells & Butlers (LON:MAB) toasted the ‘record’ sales over Christmas. In the 14 week period until early January the group saw LFL sales rise by 2.6%, and the food business outperformed as sales increased by 3%, while the drinks unit posted a 1.8% increase in sales. Consumer habits are changing as food is becoming more popular with customers, so it is a good sign that Mitchells are doing well in the area. The stock has been pushing higher since May, and should the bullish move continue it could retest the 480p area.
Galliford Try (LON:GFRD) confirmed that it has won a number of contracts so the New Year has gotten off to a strong start. The construction company said that its order book now stands at £3.2 billion. Only last week, the group finalised the sale of its house building business for more than £1 billion. The motivation behind the move was to focus on its core business, and judging’s by today’s update, that is going well.
Willie Walsh, the CEO of BA’s parent, International Consolidated Airlines (LON:ICAG), revealed plans to step down in June. Mr Walsh is well known in the aviation industry seeing as he took over the top job at BA in 2005. The travel sector has been under pressure recently on account of volatile energy prices as well as weakening consumer demand.
EUR/USD is slightly lower this morning. The German trade data revealed disappointing demand both internally and externally. Exports slipped by 2.3%, while imports fell by 0.5%, and both paint a picture of soft demand. Eurozone unemployment held steady at 7.5%, meeting forecasts.
We are expecting the Dow Jones Industrial Average to open 135 points higher at 28,880 and we are calling the S&P 500 up 16 point at 3,269.
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