The FTSE 100 is in the red heading into the close as it is enduring a broad based sell-off. Financials, commodity stocks and housebuilders are all in the red, as disappointing corporate updates triggered the declines.

Europe

Sentiment in the eurozone is weak also as carmakers and financials are some of the largest fallers. Barclays shares are a little lower after the bank posted first-quarter figures. Revenue slipped by 2%, missing forecasts, while pre-tax profit dropped by 10% to £1.54 million, meeting forecasts. The bank’s trading division registered a 6.2% drop in revenue, which isn’t ideal, but is better than many of its Wall Street competitors – which suffered double digit declines in trading revenue. Barclays' bond trading unit posted a 3.8% jump in revenue, while the equity dealing department saw revenue slide by 21%. Edward Bramson, who owns a 5.5% stake in Barclays, is keen to see the finance house move away from investment banking activities, and focus on more profitable areas of the business, and that power struggle is likely to continue.

Taylor Wimpey shares are in the red after the company warned that higher costs will weigh on margins in 2019, but the housebuilder aims to build more homes. Rising costs has been a common complaint in the sector, but demand remains robust, despite the political uncertainty surrounding Brexit. The announcement from Taylor Wimpey put pressure Persimmon and Berkeley Group.   

Sainsbury's shares have fallen to a level not seen since July 2016 after the Competition and Markets Authority (CMA) blocked its proposed merger with Asda. The CMA believes the move would led to higher prices for consumers, and it would reduce competition. Walmart, the owners of Asda, said it will review the strategy for the company, and an IPO is a possibility. Sainsbury has recently slipped to third place in terms of the largest supermarkets in the UK, and they will need to think of an innovative way to fend off the rapid growth of Lidl and Aldi.    

Deutsche Bank and Commerzbank confirmed that the merger talks are off, the share prices of both companies are lower. Both banks have undergone intense restructuring in recent years, and the low interest rate environment and lack of volatility in financial markets has made it harder to make a profit. Firms often look for a quick fix, and two weak German banks doesn’t make one strong one, and given their health, international bidders might not be too mean on either firm. Deutsche Bank are due to release their first-quarter numbers tomorrow, but they revealed some figures today. The group said that it expects pre-tax profits to be in the region of €290 million, and the consensus estimate is €141 million.   

US

The Dow Jones is in the red, while the NASDAQ 100 is showing a slight gain, as poor numbers from 3M are hurting the Dow, but positive tech stories are assisting the NASDAQ 100. Corporate earnings are in full swing, and traders are likely to take their cues from the corporate world.  

Facebook posted solid numbers last night. Quarterly revenue was $15.08 billion, which topped the $14.98 billion forecast. Average revenue per user came in at $6.42, exceeding forecasts too. The social media giant said it took a one-off hit of $3 billion in relation to a fine from the Federal Trade Commission inquiry.

Microsoft’s market capitalisation has hit $1 trillion on the back of the impressive quarterly results. EPS came in at $1.14, and conformably topped the $1 estimate. Revenue was $30.6 billion, while analysts were expecting $29.84 billion.

3M shares have sold-off severely after the company posted disappointing first-quarter figures. EPS were $2.23, which undershot the $2.49 forecast. Revenue was $7.86 billion and that undershot the $8.02 consensus estimate. The company lowered its guidance too, and that added to the negative sentiment. The firm now expects annual EPS to be in the region of $9.25 and $9.75, while the previous protection was $10.45-$10.90. 3M also announced 2,000 job cuts. 

There were mixed economic reports from the US today. The headline durable goods report showed a 2.7% increase in March, which was a major improvement on the -1.1% fall it suffered in February. The report that strips out transport, showed a 0.4% increase, and that compares with the 0.1% decline in March. The reports suggest that demand is rebounding. The jobless claims update came in at 230,000, while the consensus estimate was 200,000 and the previous reading was 193,000. The jobless claims jump was sizeable, but the jobs market is still robust. 

FX

The US dollar index rallied throughout the morning, but some of the gains were given up on the back of the disappointing jobless claims number. The greenback hit its highest level in nearly two years this today, and now we are seeing a little profit taking.

EUR/USD has fallen to a level not seen since late June 2017 as the dollar’s dominance continues. The woes of the eurozone seem to be catching up with the single currency as there were no major economic announcements from the currency bloc today.

GBP/USD has also come under pressure from the greenback, and sterling’s low volatility continues. Trading ranges on the pound have been small in light of the deferral of Brexit.

Commodities

Goldwas edging lowering this morning in advance of the US durable goods and jobless claims reports, and since then, the metal has driven higher, hitting its highest level since the middle of the month.

WTI hit a fresh six-month high, while Brent Crude has drifted a little lower. Supply concerns persist as a number of Central European countries have halted purchases from Russia due to concerns about quality.

 

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