Stock markets are largely higher this afternoon as MPs made it clear yesterday they are not in favour of a no deal Brexit.
Europe
Traders understand what UK lawmakers don’t want, but they are still unclear as to that they do want. Westminster will remain in focus today as MPs are set to vote on whether article 50 should be extended or not.
Cineworld shares are in demand after the company confirmed that full-year pre-tax profit jumped by 125%, and revenue soared by 259%. The company said the integration of Regal is going well and that the benefits of the takeover are going to be better than expected. The final dividend was upped by 17.6%. The stock gapped higher, and it hit its highest level since October, and if the bullish move continues it might target the 320p area.
Capita’s painful turnaround plan is paying off as the group posted a pre-tax profit of £273 million, and that compared with a loss of £513 million last year. Cost savings of £70 million were made and it aims to save £175 million this year. The firm announced that it has ‘fixed the basics’, and it projects a positive image, but the road to full recovery is likely to be long.
The stock has been broadly pushing higher since November, and if the uptrend continues it might target the 134p region.
DFS had a solid first-half, but there have been some signs of weakness in the second-half. The furniture company posted a 29.1% jump in six-month revenue, and pro-forma EBITDA increased by 23.8%. The second-half started on a softer note as order intake slipped ,and the company blamed weak consumer sentiment on account of the uncertainty surrounding Brexit.
US
The major indices are a little lower today as traders decided to bank the gains made in the last few days. It was reported that President Trump’s meeting with Chinese Premier Xi will be pushed back until at least April. It is believed that the talks are going well, but there is no guarantee that it will end in a deal.
Boeing remain in focus after President Trump ordered the grounding of 737 Max planes yesterday. The announcement came yesterday evening, and it initially sent the stock into the red, but it managed to finish in positive territory. Some investors are worried airlines might start cancelling orders for that particular aircraft.
General Electric shares are higher even though the company lowered its full-year guidance. The company said it now expects adjusted EPS for 2019 to be between 50 cents and 60 cents, while equity analysts were predicting 70 cents.
Dollar General shares sold-off sharply after the company issued a forecast that undershot analysts’ forecasts. The firm is expecting full-year EPS to be between $6.30 and $6.50, while the consensus estimate was $6.65. Fourth-quarter same-store sales jumped by 4%, which comfortably topped the forecast of 2.6%. Today’s move must be taken in the context that the stock hit a record-high yesterday, so the wider sentiment is still bullish.
US new home sales dropped by 6.9% in January, and this is the latest poor economic report from the housing sector.
FX
The turnaround in the US dollar after four days of losses has hurt the pound and the euro.
EUR/USD is in the red on the back of the firmer US dollar. Germany and France registered respectable inflation reports this morning, but it wasn’t enough to prop up the euro. German CPI held steady at 1.7%, and French CPI edged up to 1.6%.
GBP/USD is in the red as traders lock in their profits from the rally yesterday. Dealers are looking ahead to today’s vote, whereby MPs will vote on whether to extend article 50 or not. Given that sterling pushed higher yesterday after MPs voted to rule out no deal, some traders might have already priced in an extension.
Commodities
Gold is in the red as the firmer US dollar has hit the metals market across the board. Gold managed to move higher when the greenback was softer during the week, and now the positive move is being undone. If the metal can hold above the $1,276 region, the wider upward move might continue.
WTI and Brent Crude oil both reached four month highs today as concerns about supply persist. OPEC claimed that some major oil producers like Russia have been withholding supply. The political and financial turmoil in Venezuela hit output from the country.
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