Sentiment is positive in equity markets as traders are hopeful the Chinese authorities will give assistance to the economy in a bid to alleviate the disruption caused by the health crisis. 

Europe

There is speculation the Chinese central bank will lower the lending rate as a means of helping the economy, as well as boosting confidence in its domestic stock market. Turning to the coronavirus, the rate of new infections has fallen for a second day in a row, which has removed some of the fear surrounding the situation. Traders are buying into the markets with the view we are over the worst of the crisis, but that sort of thinking has caught out some dealers recently.

Puma shares are in demand as the company are optimistic they can achieve their full-year target of 10% sales growth despite the disruption in China. The health crisis in the second-largest economy in the world has caused Puma to temporarily close more than half its stores in the country, but the fashion house are still optimistic in their outlook . The firm’s fourth-quarter results impressed traders too. Earnings jumped by 47% to €55 million, exceeding the €52 million forecast. Revenue for the three month period rose by 18% to €1.47 billion, narrowly topping forecasts.

International Consolidated Airlines Group (IAG) have clearly impressed Qatar Airways as the company raised its stake in the London-listed group to 25.1% from 21.4%. The Qatari firm spent $600 million on the increased stake. IAG shares have rallied more than 50% since the lows of August, so it appears that Qatar Airways are content to boost their holding as investment sentiment is rising.

Deutsche Telekom shares are in demand following the impressive full-year figures and optimistic forecast. The company revealed a 78% surge in net profit to €3.87 billion, and the firm predicts that annual core earnings for 2020 will tick up by 3%.The German group are the parent of T-Mobile, who are in the process of merging with Sprint. The potential tie-up received approval from a US District Judge earlier this month, which makes the deal more likely but it has yet to be finalised.   

Flutter Entertainment shares are higher again after the group received regulatory approval from the Australian Competition and Consumer Commission to merge with The Stars Group, the news was revealed yesterday. Seeing as regulation is becoming tighter in the UK, many companies are seeking to expand their business in a bid to diversify.  

US

The mood on Wall Street is bullish thanks to China stimulus hopes as well as solid economic indicators from the US. The housing starts and building permits for January came in at 1.56 million and 1.55 million respectively, both readings topped forecasts. The PPI rate jumped from 1.3% to 2.1% and the core reading rose to 1.7%, from 1.1%. The reports painted the US economy in a positive light. 

Analog Devices shares are higher this afternoon on the back of well received first-quarter numbers. EPS came in at $1.03, topping the $1.00 forecast. Revenue for the period fell to $1.304 billion, which was marginally below the consensus estimate. Even though the company cautioned about the potential negative impact of the coronavirus crisis in China, the firm still hiked quarterly dividend by 15%, and that fuelled the bullish sentiment.

Tesla shares continue to be popular with finance houses as Piper Sandler upped its price target for the stock to $928 from $729. Wall Street banks are clambering over themselves to hike their price targets for the stock, but lofty price targets equate to loft expectations.    

FX

The dollar’s dominance in the currency markets continues on the back of the strong economic indicators. GBP/USD has seen a lot of volatility today as the pound gained ground on the back of the firm UK inflation figures but the market turned over on itself. The CPI reading jumped to 1.8%, from 1.3%, and the core level increased to 1.6%. Despite the upbeat numbers the pound still fell today.

USD/CAD is the red as a jump in Canadian inflation along with strong oil prices has helped the Canadian dollar. The fact the greenback is a littler lower versus the Canadian dollar speaks volumes about the latter. The CPI rate in Canada jumped to 2.4% from 2.2%, topping the 2.3% forecast.  

Commodities

Gold continues its bullish run as some traders are nervous about the health crisis in China. The metal hit is highest level since early January – the height of the US-Iran tensions, and it is currently above the $1,600 mark. Gold’s upward move has been made all the more impressive by the fact the greenback is up too.

WTI and Brent crude oil have hit their highest levels since late January as hopes that China will deliver a boost to the economy has lifted sentiment in the energy market. Oil has been dragged around by the China story recently as the nation is the world’s biggest importer of the commodity. The early indicators that the health emergency is slowing has encouraged the oil bulls too. 

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. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.