European equity markets are largely unchanged. 

Europe

It has been a lacklustre session, partially because of an absence of major macroeconomic news. Some traders took the opportunity to take some cash off the table. European equity markets saw multi-month highs yesterday, and today investors are sitting on their hands. It is almost as if dealers are looking for upbeat news to justify the positive run.

Barratt Developments and Redrow revealed solid first-half numbers today. Barratt’s saw revenue and profit before tax rise by 7.2% and 19.1% respectively.  The net cash position increased by 133%, and operating margin improved by 130 basis points to 19.2%. It is impressive that margins improved in an environment of higher wages and material costs. Barratt’s confirmed that forward sales increased by 7.3%, and the full-year outlook remains in line with the board’s expectations. Redrow also put in a solid performance in the first-six months. Pre-tax profit for the six-month period jumped to record levels, and group revenue ticked up by 9%. Legal completions rose by 12%, and the order book ticked up by 11%. Some investors are cautious of the UK property market due to cooling prices and uncertainty surrounding Brexit, but Redrow and Barratt Developments have shown the market the industry is still strong.

CRH shares are higher today after it was reported that Cevian Capital have built up a stake in the company. Traders are taking the view that the activist investor will pressure CRH’s management to make the company more profitable.

CYBG announced that profit margins would be better than initially expected. Full-year net interest margin are now expected to be in the range of between 1.65% and 1.7%, which is at the upper end of forecasts. The banking group also announced that the cost savings would be £20 million higher than the initial forecast. The stock moved higher today, and a break above the 215p region might pave the way for further gains.

US

The major indices has slid back a small bit today as the recent rally has taken a breather. There has been nothing of any major substance in relation to how US-China trade talks are developing, and seeing as that issue weighed on stocks at the back end of last, it is going to remain on traders’ minds.

The US trade deficit narrowed to $49.3 billion in November, from $55.1 in October, and economists were expecting a deficit of $54 billion. Some of the economic indicators from the US recently have been on the soft side, and given that imports declined, it might be a sign of weakening demand.

Snap shares are higher after the group announced better-than-expected figures last night. The fourth-quarter-loss per share was 4 cents, while analysts were expecting a loss of 7 cents. Revenue for the period was $390 million, which topped the $378 million predicted. Average revenue per user was $2.09, and the consensus estimate was $2 05. The company’s performance is stabilising as active users held steady after recent declines, and the number of advertisers increased. Social media is all about popularity, and unless the company can claw back its previous client base, the stock will struggle to get back to the levels seen in 2018 and 2017.

General Motors announced a strong set of figures. The fourth-quarter EPS came in at $1.43, which comfortably topped the $1.22 forecast. Revenue was $38.4 billion, while the consensus estimate is $36.48 billion. The company is in the middle of a cost cutting plan which will see a total of 14,000 jobs cut. The automaker has decided to focus more on sports utility vehicles and trucks, and reduce the production of sedans – which are selling at a slower rate.

FX

EUR/USD is lower on the day due to a wider push higher in the US dollar. The poor German factory orders were also a factor in the euro’s weakness. The report showed that German factory orders dropped by 1.6% in December, while economists were expecting an increase of 0.3%. It is increasingly clear the German economy is slowing down.

GBP/USD has pulled back some of yesterday’s losses. It has been a quiet day for sterling in terms of economic announcements. The Bank of England interest rare decision tomorrow will be in focus. Some traders believe the UK central bank won’t hike rates this year, regardless of Brexit as the latest UK data has pointed to a slowdown. 

Commodities

Gold has edged lower due to the stronger US dollar. The inverse relationship between the two markets continues to be strong. Gold’s rebound began in August, and the metal has been in a solid upward trend since mid-November, and today’s pullback might entice new buyers.

Oil saw a jump in volatility on the back of the Energy Information Administration report. US oil stockpiles increased by 1.26 million barrels, while traders were expecting a build of 2.2 million barrels. Gasoline inventories jumped by 513,000 barrels, and traders were expecting an increase of 1.6 million barrels.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.’