23-4-2020 11:50:2023-4-2020 11:45:45Stock markets are in positive territory as we approach the close but keep in mind the major indices have been largely edging lowering since lunchtime.
The positive move has been influenced by speculation that we might see interest rate cuts from the Bank of England as well as the European Central Bank in the near-term. Some traders feel the central banks might sit on their hands for a while and see how things play out. In light of the Fed’s emergency rate cut yesterday, the chatter about other central banks cutting too is likely to do the rounds for a while.
Intu Properties’ shares tumbled today when the company scrapped plans to raise funds in excess of £1 billion. The struggling property group is feeling the pressure from its own debt level, hence why it was hoping to raise cash from existing shareholders. The sector as a whole is under attack from online shopping, but Intu appears to be the worst of a bad bunch. The group decided against the financing scheme on account of market conditions, but given the knock to the share price, investors are likely to remain cautious of the company.
It was revealed today that Grahame McGirr left Metro Bank last week. The banker was only at the company for a couple of weeks, and it is believed he was due to take up the role of interim chief risk officer on 1 March. It is understood MrGirr was asked to leave the bank before taking up the job. Aileen Gillian, chief risk officer, was asked to stay on in the job until a successor has been found. The bank reported an annual loss of £130 million last week, so today’s news adds to the negative sentiment.
DS Smith shares are higher this afternoon on the back of a respectable trading statement. The company confirmed that group like-for-like corrugated box volume growth has ticked up in the second-half. The firm said it t is performing well in the UK, Eastern Europe, as well as Iberia, but the German market was described as ‘stubborn’.
Lufthansa announced they will be grounding roughly 150 planes on account of the coronavirus crisis. The move would mean that approximately 20% of the group’s air fleet would be out of commission –that is likely to have an impact on earnings. We might see the like of BA, Ryanair and easyJet follow suit. The government rejected Flybe’s request for a £100 million loan. Robust airlines are finding it tough at the moment so Flybe might struggle to stay in the air.
The mood on Wall Street is optimistic after the madness yesterday. Traders are buying back into stocks as there are hopes more central banks will go down the route of lowering rates. Central bankers around the globe might not have agreed with the Fed’s move, but they might consider cutting rates in order to keep in step with the US central bank.
General Electric issued a coronavirus-related warning as the company expects the crisis to knock-off between $300 million and $500 million from the first-quarter cash flow position. On the bright side, the company reaffirmed its end of year forecast for cash flow, so it seems the firm is only nervous in the near-term.
Nordstrom shares are down more than 2% as quarterly results disappoint. The company posted EPS of $1.42 but traders were expecting $1.47. Revenue for the three month period came in at $4.54 billion, but the consensus estimate was $4.56 billion.
Lyft shares are higher after the company confirmed the health crisis has not had a negative impact on demand, and the company reaffirmed its first-quarter guidance.
The ISM non-manufacturing report was well received as the reading was 57.3, topping the 54.9 forecast, and it was an improvement on the 55.5 posted in January. The final reading of the services PMI report was less impressive as the level was 49.4.
The Beige Book will be released at 7pm (UK time). The update might shed some more light on why the Fed unexpectedly cut interest rates by 0.5% yesterday. Some traders were wondering if the Fed know something that we don’t, so if they do, the Fed can now share that information.
Joe Biden had a good Super Tuesday as his campaign saw a comeback. The former vice president appears to have the edge over Bernie Sanders, and that has been welcomed by traders as he is more business friendly than Sanders.
USD/CAD jumped on the back of the news the Bank of Canada cut rates by 0.5%. Traders were expecting some sort of rate cut but not everyone was expecting a 0.5% cut, so the US dollar gained ground versus ‘the loonie’.
The rebound in the US dollar in the wake of yesterday’s sharp decline has hurt EUR/USD. The major countries of the eurozone published their final reading of the service PMI reports. The updates were mixed as the French reading was 52.5, which was an improvement on the flash reading of 51. While the German reading slipped to 52.5 from the flash reading of 53.3.
GBP/USD has been hurt by the stronger US, but there is also chatter about the Bank of England cutting rates too. Some traders are sceptical about the BoE potentially lowering rates. The final reading of the UK services PMI was 53.2, which fractionally missed forecasts.
Gold is slightly lower this afternoon as the bullish sentiment has cooled from yesterday. The rebound in the US dollar plus the pushing higher in European as well as US stocks has hurt the metal. Some dealers may be willing to buy back into equities, but gold is still well above the closing level on Friday, so some nerves still exist in the market.
Oil is higher on the talk that OPEC+ might cut output by 1.5 million barrels per day. The major oil producing nations will start their two day meeting tomorrow. The EIA report showed that US oil inventories only increased by 785,000 barrels, while traders were expecting a build of 3 million barrels. Gasoline stockpiles dropped by more than 4 million barrels, exceeding forecasts.