Stocks are set to finish the day on a positive note as the possibility of targeted liquidity from the European Central Bank (ECB) and positive comments from the US-China trade talks has lifted investor sentiment. 

Europe

Benoit Coeure, of the ECB, said it is possible there might be a fresh round targeted liquidity into the banking system in a bid to spur lending at eurozone retail banks. 

RBS posted good full-year figures. Operating profit before tax was £3.35 billion. Operating profit before tax for the fourth-quarter was £572 million, which exceeded the estimate of £371 million. The bank declared a final dividend of 3.5p, and it also announced a special dividend of 7.5p – its first special dividend since the credit crisis. Given the government’s stake in the bank, it is due to collect roughly £800 million in the form of a pay-out. On the year, impairment provisions were £3.3 billion, which is an improvement on the £3.8 billion last year. The common equity tier 1 ratio for 2018 was 16.2%, and that compares with 15.9% a year ago. One disappointing aspect of the report was that net interest margin dipped from 2.13% to 1.98%, but that is likely to be the case for UK banks across the board. RBS is clearly in better shape than it was one year ago, and it is slowly shaking off the negative image it gained during the banking crisis.

Segro shares are higher after the company posted a 24.4% rise in full-year adjusted pre-tax profit to £241.5 million. The property firm announced plans to raise £450 million and beef up development as demand is strong. The rise of online shopping has greatly helped the warehouse specialist, and that is in stark contrast to the traditional property groups what own shopping centres – which are experiencing steady declines in footfall. The full-year dividend was upped by 13.3p to 18.8p – which underlines their confidence in the business. The stock has been pushing higher since late December, and if it holds above 640p – 200-day moving average, it might retest the 680p area.

Standard Life Aberdeen shares are in the red after Mitsubishi UFJ Trust and Banking Corporation sold-off a large block of shares in the firm. The stock has been in decline since September, and if the bearish move continues it might target the 220p region.

US

The Dow Jones and the S&P 500 are firmly higher today after it was reported that trade talks in Beijing are going well. It was claimed that progress has been made on important issues, and Xi Jinping, the Chinese president, hopes both sides can reach a mutually beneficial agreement. Trade talks will continue in Washington DC next week, and that is seen as another positive sign.

Deere & Co revealed disappointing first-quarter figures. Adjusted EPS rose by 14% to $1.54, but analysts were expecting $1.76. Net revenue for the period increase by 16%. The company confirmed that costs edged up by 2%.The protracted trade war between the US and China is having a negative impact on the tractor-manufacturer. Despite the underwhelming figures, the company maintained its full-year forecast. 

Pepsico revealed respectable fourth-quarter results, but the outlook was lowered. The group is going to ramp up the marketing budget and expansion costs, and that has prompted the firm to reduce its full-year earnings forecast. Investing in the future is no bad thing, as long as it pays off. Fourth-quarter EPS and revenue were $1.49 and $19.52 billion respectively – both met forecasts.

Industrial production declined by 0.6% while traders were expecting an increase of 0.1%. Import and export prices dropped by 0.5% and 0.6% respectively. The update indicates the US economy isn’t in as strong a shape as some investors believe.   

FX

EUR/USD is in a the red after Claudio Borghi, the Lega Party’s economic spokesperson, said the country will leave the euro should the party gain a majority at the next election. This shows the longer term intentions of the party, and should Italy start moving to the exit, it could further weaken the euro. The comments from Benoit Coeure put pressure on the single currency too. 

GBP/USD is higher after the UK revealed solid retail sales figures for January. The report showed a 1% increase, which topped the consensus estimate of 0.2%, and the December figure was revised higher from -0.9% to 0.7%. Many British retailers complained about slashing prices, so the jump in retail sales might be on the back of discounting.  

Commodities

Gold continues to grind higher and the metal reached a level not seen since the beginning of the month. The commodity has been in a solid upward trend for three months, and if it holds above the $1,300 mark, it might target the $1,335 area.

Oil has pushed higher on the back of OPEC production cuts that were announced earlier this week. The upbeat remarks in relation to US-China trade talks added to the move higher too. 

 

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