market relief

Stocks are marginally weaker this morning as profit-taking has set in.

European equity markets finished on a high note after the US softened its stance regarding international investment. Now that the dust has settled, investors are taking some money off the table. The trade conflict has cooled a little, but traders are mindful that it is far from resolved.. 

Stagecoach shares are in the red after the company cut its dividend to 7.7p from 11.9p. Last month the rail and bus operator lost the East Coast mainline franchise. The government decided to renationalise the line and that involved removing it from the control of Stagecoach and Virgin. The firm’s full-year figures weren’t too impressive, as revenue and adjusted pre-tax profit fell by 18% and 4% respectively. Last August, Stagecoach’s South West Trains franchise ended, and that contributed to the decline in revenue. The stock has been in decline for seven months, and if the negative move continues it could target 120p.

A group of Takeda shareholders failed to build support to block the takeover of Shire. The group put forward the idea that acquisitions should require advance shareholder approval, but the company knocked this back as they feel it would curtail their competitiveness. Shire shares are higher this morning.

Greene King shares have fallen after the company revealed a disappointing set of full-year figures. Revenue fell by 1.8% and adjusted pre-tax profit declined by 11.2%. The firm blamed higher property and employment costs, as well as weak consumer spending for the poor performance. Greene King delivered a cautious outlook too, but given England’s success so far in the World Cup, the pub group could be in for a good summer. The stock dropped to its lowest level in over a month on the back of the results.

EUR/USD is a touch higher despite the firmer US dollar. The Spanish inflation rate ticked up to 2.3% from 2.1%, while the consensus estimate was for a rate of 2.2%. The rise in the cost of living suggests that demand is increasing, which is encouraging.

Bed Bath & Beyond will be in focus after the company reported first-quarter earnings yesterday. Same-store sales slipped by 0.6%, while equity analysts were anticipating an increase of 0.1%.  

At 1.30pm (UK time) the US will release the final GDP reading for the first-quarter and the consensus estimate is for a reading of 2.2%.

We are expecting the Dow Jones to open up 70 points at 24,187 and we are calling the S&P 500 up 9 points at 2,708.

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