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Stocks bounce back after Merkel/Seehofer deal

Stock markets in Europe have bounced back after a potential political crisis was averted in Germany. 

Chancellor Angela Merkel has reached an agreement with Horst Seehofer, the interior minister, regarding immigration. It appears the coalition government will live to fight another day, and this has lifted market confidence in Europe. 

McBride shares are in the red after the company issued a profit warning. The firm now expects full-year adjusted pre-tax profit to be marginally below the lower end of analysts’ estimates. On a positive note, the company confirmed it is selling its care liquids business to Royal Sanders for £12.5 million. The firm anticipates total second-half revenue to be 15.8% higher than the same period last year. McBride also issued a profit warning in January, and after today’s update investor confidence has taken another knock. The stock has been be in a downward trend since December 2017, and if the bearish trend continues it could target 100p.

Credit Suisse upped its price target for International Consolidated Airlines Group from 721p to 895p.

Glencore shares are lower after the US Department of Justice (DoJ) requested documents from the mining company regarding its operations in Nigeria, Venezuela and the Democratic Republic of Congo. The DoJ are seeking information about Glencore’s activity in these counties as far back as 2007. No additional details were given, but we know the records are connected with the Foreign Corrupt Practices Act and US money laundering statues. The request from the DoJ has dented investor sentiment, and the share price has fallen to a one-year low. A break below 300p might send the share price to 275p.

Herman Miller shares will be in focus today after the company posted better-than-expected fourth-quarter results yesterday. The furniture firm revealed earnings per share of 66 cents, which easily topped the 58 cents than equity analysts were expecting. 

GBP/USD is higher after the UK revealed stronger-than-expected construction data. The construction PMI report for June came in at 53.1, up from 52.5. Economists were expecting it to remain at 52.5. Today’s report was the highest reading since December 2007, which is encouraging as it suggests the sector is over the collapse of Carillion. 

EUR/USD is taking advantage of the softer US dollar after this morning’s mixed eurozone economic updates. The May PPI report rose by 0.8%, up from a 0.4% rise in April. The retail sales report showed no growth on the month, while economists were expecting a 0.1% increase. 

At 3pm (UK time) the US will release the factory orders report for May, and the consensus estimate is for a level reading of 0%, which would be an improvement on the 0.8% decline in April.

We are expecting the Dow Jones to open up 118 points at 24,425 and we are calling the S&P 500 up 10 points at 2,736.


CMC Markets is an execution-only service 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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