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JD Sports in fashion while UK CPI slips

European equity markets are edging higher this morning as traders remain optimistic. This mood in this part of the world isn’t as upbeat of that in the US, but it isn’t far off it. 

Shares in JD Sports are up 6.3% after the company issued a positive trading update. The retailer raised its earnings guidance for the second time in four months. In recent years wearing sports or active wear in everyday-life has become more popular, and in turn JD Sports have benefitted from it. The company is performing well in a ‘challenging environment’ and investors are reacting positively to the announcement. The stock hit a six month high in early trading.

Provident Financial stated it expects to lose £120 million at its consumer credit operation. The company has been suffering for several months after it overhauled its loan collection division last summer. The company is still enduring the consequences and now it still expects to register a loss at that unit. The share price is down 4% today.

BP will take $1.7 billion charge in relation to the Deepwater Horizon disaster. The change in US tax law brought about this as the oil titan can no longer offset losses versus tax bills. The share price is down 1.9%. 

GBP/USD has slipped back when the UK inflation rate dipped to 3% from 3.1% in November. The consensus was for a reading of 3%, but traders used it as an opportuning to take the profits on the pound. The retail price index (RPI) jumped to 4.2% from 4%, and the fact that they are moving in opposite directions could be an indicator that demand in the UK is firmer than the headline CPI implies. Sterling has been in a solid upward trend versus the US dollar for over nine months.

EUR/USD has been hit by the slide in German inflation. The cost of living in the largest eurozone economy fell to 1.7% from 1.8% - meeting expectations. The cooling of the inflation rate suggests that demand is weak and that is something that worries Mario Draghi, the head of the European Central Bank (ECB). Mr Draghi would potentially be keen to keep the door open for additionally monetary easing in the currency bloc in order to stimulate inflation.  

Bitcoin has dropped below $12,000, a level not seen since early December. The cryptocurrency has fallen nearly 40% since its all-time high.  

At 1.30pm (UK time) the US will announce the New York Empire state manufacturing survey, and traders are anticipating a reading of 18.   

We are expecting the Dow Jones to open up 267 points at 26,070, and we are calling the S&P 500 up 14 points at 2800.

Citigroup will announce its third-quarter figurers later today.

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