It is a mixed bag in Europe. 

Europe

The FTSE 100 is firmly in the red as a broad based sell-off in consumer, energy and mining stocks has weighed on the British index. China’s manufacturing PMI report fell further into contraction territory to 49.2 – its lowest reading since early 2016. The second-largest economy in the world is a major importer of commodities and that is a large factor in the FTSE 100’s underperformance. Eurozone stocks managed to move off the lows of the session and some of the equity benchmarks are now in positive territory. 

Aston Martin shares are in the red after the company posted a 7% fall in full-year adjusted pre-tax profits to £68 million. The firm said one-off initial public offering and pension costs were to blame for the dip in earnings. Sales were solid as vehicle sales jumped by 26% to 6,441 - beating their forecast. The group reiterated its sale outlook for 2019 – sales of between 7,100 and 7,300. The luxury car maker is taking Brexit seriously, and has set aside £30 million for contingency plans. 

RentokilInitial confirmed that annual adjusted pre-tax profit increased by 7.4%. The company performed well last year and it ‘made a good start’ to this financial year. The final dividend was upped by 15.2%, and the group expects to spend between £200 million and £250 million on mergers and acquisitions in 2019, so the firm is clearly optimistic in its outlook.

RSA Insurance shares are lower after the firm declared a 20.6% decline in underlying pre-tax profit. A number of large one-off losses impacted the business. RSA confirmed the percentage of revenue spent on costs and losses increased to 96.2%, from 94%. The total dividend was increased by 7% and the group’s solvency II coverage ratio came in at 170%, which exceeded the top-end of their own target. 

US

The Dow Jones and S&P 500 are slightly in the red, despite impressive growth figures.The US economy grew by 2.6% in the final-quarter of 2018, topping the forecast of 2.3%. The strong finish is all well and good, but the US economy is likely to have started 2019 on a softer note given the government shutdown.

Larry Kudlow, economic advisor to President Trump, said fantastic progress was made on the China talks, but the comments failed to boost sentiment.

Richard Clarida, of the Federal Reserve, was speaking today. Mr Clarida said that financial conditions are more supportive of outlook today than they were in December. There are is ‘no real evidence’ of cost push pressures, according to Mr Clarida.

Box shares sold-off heavily today after the company released mixed results after last night’s close. Adjusted fourth-quarter EPS was 6 cents, which comfortably topped the 2 cents that analysts were expecting. Revenue slightly undershot forecasts. The group’s full-year guidance was well below analysts’ expectations. 

JC Penney shares are higher today on the back of well received fourth-quarter result. EPS were 18 cents, which easily topped the 10 cents forecast. Revenue for the period was largely in line with estimate. Same-store sales declined by 4%, while analysts were expecting a drop of 4.3%. The group plans to close 18 stores, and that includes three stores it previously mentioned in last month’s update. 

FX

EUR/USD was higher today after some major eurozone economies produced respectable inflation figures, but the rebound in the greenback hit the euro. French CPI ticked up from 1.4% to 1.5%, and Spanish CPI edged up to 1.1%, from 1%. While German inflation held steady at 1.7%, meeting forecasts. The report indicates that demand in the currency-bloc is strong.

GBP/USD moved lower today as profit taking on the pound set in, and the edge up in the greenback due to the US growth figures played a role too. There has been a growing feeling that Brexit will be delayed, and that that lifted the pound earlier in the week, and today we are seeing some of the ground being handed back.

Commodities

Gold is in the red today as the firmer-than-expected US growth numbers put pressure on the commodity. The metal has a strong inverse relationship with the US dollar, and the GDP pushed the greenback higher, and in turn, gold lower. Despite today’s negative move, if the metal holds above the $1,300 mark, its outlook should remain positive.

Oil is mixed today in the wake of yesterday’s report that US stockpiles dropped dramatically, while US output hit a record high. The disappointing manufacturing figures from China overnight are weighing on the oil market too.  

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