European stock markets are in positive territory heading into the close as the global mood has mellowed a little. 

Europe

Last night, MPs voted in favour of preventing a no-deal Brexit in the near-term, and the situation in Hong Kong seems to have improved too. UK politics will remain in the news as the Brexit date could be pushed back again, or we might be in for a general election in a few months, but the fear of no-deal Bexit has cooled, for now at least. Carrie Lam, the chief executive of Hong Kong, called for the withdrawal of the controversial extradition bill, and that prompted a surge in the Hang Seng, and the feelgood factor spilled over to Europe, as there is a sense things will improve in the region.       

Dunelm confirmed an impressive set of full-year figures, but the group issued a cautious outlook, and that weighed on the stock. Annual profit-before tax increased by 23.4% to £125.9m, meeting forecasts. Like-for-like sales jumped by 10.7%, and gross margin increased by 160 basis points. The final dividend was 20.5p, and the special dividend was 32p, and the cash returns are impressive for the retail sector, which is largely struggling. The group issued a cautious outlook and that took the shine off the positive numbers. 

Barrett Developments had a similar faith to Dunelm, whereby the figures but positive, but the outlook was soft. Full-year pre-tax profit jumped by 8.9%, total forward sales edged up too. Operating margins were 18.9%, which was an improvement on last year’s 17.7%. The group predicts that current volumes will be at the lower end of expectations, and that prompted the stock decline.

US

Wall Street is benefiting from the broad uptick global market sentiment. The remarks from Hong Kong’s Lam should in a roundabout way assist help the US-China trade talks, as previously, President Trump called on Beijing to behave in a ‘humane’ fashion in relation to the situation.  

Starbucks shares trade lower after the group trimmed its guidance. The group predicts the full year 2020 EPS will fall below the target of 10% growth. The group projects that full-year EPS for 2019 will be between $2.80 and $2.82, and traders were expecting $2.82. Despite today’s small drift lower, the stock is still up 47% year-to-date, and it remains in its bullish trend.  

Tyson Foods lowered its full-year guidance, and the group cited a fire at a major factory, as well as volatility in the commodity prices after the lowering of the guidance. The group now foresees full-year EPS of between $5.30 and $5.70, while equity analysts were anticipating $5.94. The stocks is down 4%.

FX

USD/CAD sold-off sharply after the Bank of Canada (BoC) kept interest rates on hold at 1.75%, and the central bank didn’t use overly dovish language in its statement, and that lifted the Canadian dollar. The BoC predicts that core inflation will hang around the 2% mark, and it commented on the strength of the housing market. US growth is ‘solid’ according to the Canadian central bank, and that added to the view they won’t be cutting rates anytime soon.

GBP/USD rallied today despite the political upheaval in the UK. MPs who oppose a no-deal Brexit will try and push Prime Minister Johnson to request a three month extension, but at the same time, Boris might be lining up a general election for later this year. Sterling’s rebound from yesterday continues, and dealers will be paying close attention to the voting in the commons tonight.       

Commodities

Gold is largely unchanged today. The metal is being pulled and dragged in either direction as the benefits of the soft US dollar are being offset by the risk-on strategy. The drop in the greenback would usually help gold, but the jump in stocks has drawn money away from the metal.

Oil has rebounded from the decline yesterday and the broadly optimistic mood in the market has helped oil. The largely positive services data in China and Europe helped, and so did the news from Hong Kong as they fed into a more hopeful view, and that prompted traders to buy back onto the oil market.         

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