Stocks are lower this afternoon as investors continue to be worried about the state of US-China trade relations. 

Europe

The two sides will sit down to discuss trade later this week, and seeing as the sentiment has been less than optimistic recently, dealers are a little on the nervous side.

It was reported over the weekend that Marks & Spencer and Ocado are in talks about a possible partnership. Ocado have been striking new partnerships in recent years, as their online delivery service has proved to be popular, and now it seems that M&S are interested in a deal. M&S’s clothing division continues to underperform, and the group cancelled plans to expand the food division. M&S has a limited delivery services in terms of geographical reach, and a deal with Ocado could potentially help the company tap into expanding its client base of online shoppers. More and more shopping is done online and M&S need to adapt to the new environment. 

SThree announced that full-year adjusted profit before tax jumped by 20% and revenue increased by nearly 13%.The recruiter said it is on track to achieve its five-year plan that was revealed in November 2017, and that was a big boost to investor confidence. Germany continues to be one of its best performing markets and it hasn’t seen any slowdown in hiring.

Paragon Group confirmed that new lending jumped by over 40% in the three month period until the end of 2018. Deposits ticked up, and the common equity tier 1 ratio improved slightly too. The group confirmed that demand is firm and the outlook is positive. It is encouraging to see robust demand on the run up to Brexit, but a no deal scenario could leave the company exposed.

Tesco might seek to cut 9,000 jobs. The supermarket giant has been undergoing major restructuring under the leadership of Dave Lewis. The group is engaging in a strict cost cutting scheme as a way of coping with the rise of Lidl and Aldi. The stock has pushing higher since late December, and if the move continues it might target the 245p region.

Jefferies predict that Chinese demand for iron ore will increase. The bank raised its price target for Rio Tinto to 4,700p, it upped its BHP Billiton price target from 1,600p to 1,800p, and its price target for Anglo American is now 2,350p.

Micro Focus shares are in the red today after Goldman Sachs downgraded the stock to neutral from buy.

US

The Dow Jones and S&P 500 are in the red as disappointing corporate updates from Caterpillar and Nvidia have added weighed to the argument that China is slowing down. Trade representatives from both countries will meet in the US this week, and given the Chinese economy is cooling at as faster rate that the US, the Trump administration are likely to leverage that position.  

Caterpillar shares have sold-off today after the company posted largely underwhelming fourth-quarter numbers. EPS were $2.55, which undershot the $2.99 that analysts were expecting. Revenue was $14.34 was in line with estimates. The forecast wasn’t too hot either, as the group expects full-year EPS to be between $11.75 and $12.75, while the consensus estimate was $12.72. The group blamed the slowdown in the Chinese economy for the mediocre update.

Nvidia cut its revenue forecast and the firm blamed ‘deteriorating macroeconomic conditions, particularly in China’ for the weakened outlook. The chip maker now expects fourth-quarter revenue to be $2.2 billion, while the previous guidance was $2.70 billion. The stock has been in an aggressive downtrend since October, and if the bearish move continues it might target the $125.00 region.

FX

GBP/USD is in the red as dealers’ book their profits on the positive move it enjoyed last week. Tomorrow will be an important day for Theresa May as MP s will debate her Brexit Plan B, unless some solution to the Irish backstop is brought to the table, the proposal is likely to be rejected.

EUR/USD has edged higher even though it has been a quiet day in terms of eurozone economic indicators. Mario Draghi, the European Central Bank (ECB) chief, said the balance of risk has moved to the downside, but added, the ECB can use monetary tools again. In the US, the Congressional Budget Office, claimed the government shutdown will cost the economy $11 billion. 

Commodities

Gold has crept higher and managed to reach a seven month high. The metal has been eyeing the $1,300 mark for a number of weeks, and today it managed to clear the level. The risk off attitude of traders has helped drive the metal to a multi-month high, and if the positive move continues it might target the $1,326 area.  

Oil is in the red as concerns about oversupply and worries about weaker demand have hurt the energy. On Friday, the Baker Hughes rig count report showed the number of active rigs in the US jumped by 10. There are also concerns about the state of the China economy, and its trade dispute with the US is a factor too.
 

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