Stocks are higher this afternoon as traders are hopeful about the US-China trade talks that are taking place. 

Europe

US treasury secretary, Steve Mnuchin, said the talks were going well. President Trump will potentially ease up on the March deadline, and that is seen as a positive sign. Overall, we have heard very little about the discussions, but importantly, what we have heard has been positive so traders are happy to buy into the market.    

Tullow Oil revealed that it made its first net-profit in five years. The oil company made a post-tax profit of $85 million, and the group also paid a dividend of 4.8 cents – its first pay out since 2015. Admittedly, the size of the profit and the dividend aren’t massive, but they are hugely symbolic, it gives the impression the company has drawn a line under the last few years, and is back on the right track again. The firm has pledged to increase its dividends over the next few years, and at the same time, keep trimming the debt level.

Galliford Try shares are in demand after the company announced that it expects full-year profit to be at the upper end of forecasts. The construction firm confirmed that first-half revenue dipped by 5%, and pre-tax profit edged up by 4%. The net debt position was reduced by 53% and the interim dividend was cut by 17.8%. The group has a solid order book, but they are cautious about the near-term outlook on account of Brexit. The stock has been rebounding since late December, and a break above 800p could pave the way for further gains.

Dunelm stated that first-half pre-tax profit grew by 14% and like-for-like (LFL) revenue rose by 6.9%. LFL in-store sales increased by 3.8%, while LFL online sales jumped by nearly 36%. It is encouraging to see the company is embracing the rise of online sales, while also making respectable sales on the high street. The firm is becoming more nimble, as net debt has been slashed and the cash position has surged. As far as retailers go, Dunelm is in good shape.

US

The major equity benchmarks are all up today as optimism surrounding US-China trade negotiations as well as improved domestic politics has lifted sentiment. President Trump intends to sign the border security deal in order to prevent another government shutdown. Even though, US stocks pushed higher during the recent shutdown, the announcement that domestic politics are improving has added to the upward move.

Hilton Worldwide shares have jumped today after the company posted solid fourth-quarter results. EPS for the final-quarter of last year were 79 cents, which comfortably topped the 69 cents forecast that analysts were expecting. Revenue for the period was $2.29 billion, topping the $2.27 billion expectation. The group’s outlook was largely in-line with forecasts too.

Johnson & Johnson confirmed it would acquire Auris Health for $3.4 billion .The takeover will give the company exposure to the robotic surgery sector. J&J are already a major player in medical devices and the pharmaceutical sector, and the acquisition will complement the business. 

The headline CPI rate dipped to 1.6%, from 1.9% in December, but economists were expecting 1.5%. The core CPI rate remained flat at 2.2%, and the reading topped the forecast of 2.1%. The sharp decline in the oil market in the last quarter of 2018 has weighed on inflation rates around the world, but it is promising that the core rate remained unchanged. 

FX

The US dollar index is pushing higher today as it rebounded from yesterday’s downward move .The latest US CPI figures added to the positive move too. The US economy continues to tick along nicely, and given its relative strength, the US dollar is likely to remain in demand.

EUR/USD sold-off in the wake of the poor eurozone industrial output figures, and the firmer US dollar added to the move. On an annual basis, eurozone industrial output contracted by 4.2%, while economists were expecting a decline of only 3.2%. The report was further proof the euro-area is undergoing an economic downturn.

GBP/USD lost a little ground due to soft UK inflation data. The CPI reading was 1.8%, which undershot the 1.9% that economists were expecting. The core CPI report held steady at 1.9% - meeting forecasts. The pound has been falling versus the US dollar for the past two weeks, but if it can hold above the 50-day moving average at 1.2819, it might seek to retest the 1.3000 area.

Commodities

Gold rallied today, which is impressive considering the rally in the US dollar. The commodity has been in an upward trend for three months, and if it can hold above the $1,300 level, it might target the $1,335 area.

Oil saw a jump in volatility after the Energy Information Administration report showed that US inventories increased by 3.6 million barrels, which topped the 2.66 million barrel forecast. The energy market is still higher today on the back of the announcement that Saudi Arabia intend to cut output by more than originally stated.  

 

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