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Mixed PMI reports weigh on European sentiment

European stock markets are a little lower this morning as the mixed PMI reports from France and Germany prompted traders to take some money off the table.

The DAX and the CAC 40 racked up six month highs yesterday, and now we are seeing a pullback. Traders are mindful of the Easter break and we might see some trimming their positions ahead of the long weekend.     

Unilever announced a 1.6% drop in first-quarter sales to €12.4 billion, which topped analysts’ forecasts expectations of €12.3 billion. The disposal of the spreads business was responsible for the dip in sales. Prices ticked up by 1.9% while volumes edged higher by 1.2%, and that is a little concerning as a company can’t depend on higher price hikes forever. Well established markets like the Americans and Europe posted sales growth of 0.4% and 0.6% respectively, while emerging markets like Asia, Africa, the Middle East and Eastern Europe registered a 6% rise in sales.  

Rentokil shares have reached another all-time high this morning after the group revealed a solid first-quarter update. Revenue for the first three months jumped by 8.9%, but a sizeable portion of that was down to acquisitions, and the organics growth rate was 4%, which was an improvement on the 3.2% achieved in the previous years. 

Moneysupermarket revealed a 19% jump in first-quarter revenue. The home services division reported a 70% jump in revenue and the money department saw revenue increase by 9%.  The price cap in the energy market and the availability of attractive offers to switch providers helped the company. The group maintained its outlook for the year, and it pledged to return £40 million via a special dividend.

EUR/USD is lower on the session in the wake of the mixed PMI reports from Germany. The manufacturing PMI report improved from 44.1 in March to 44.5 in April, but it missed the 45 estimate. The German services report was 55.6, topping the 55.1 forecast.  The French manufacturing and services PMI reports were mixed too.

GBP/USD shrugged off the impressive UK retail sales figures. Last month, UK retail sales jumped by 1.1%, which smashed the -0.3% forecast. The February figure was revised higher from 0.4% to 0.6%. Stockpiling because of Brexit, might be the reason behind the figures, but the reports were impressive nonetheless.

American Express will be in play today as the company will reveal its first-quarter figures today. The firm confirmed that annual profit more than doubled in January, and it issued an optimistic outlook for 2019 as it felt that consumer spending was ‘reasonably strong’.

We are expecting the Dow Jones to open 89 points lower at 26,360 and we are calling the S&P 500 down 8 points at 2,892.


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