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Europe lower on US-China trade tensions, Domino’s slump on profit warning

European equity markets are a little in the red this morning as tensions persist between the US and China, even though it was confirmed that China’s vice premier Liu He will be a part of the trade delegation that visits the US this week. 

British investors missed the excitement yesterday, and now they are playing catch up, but it seems that tensions may have cooled, but not disappeared. The bullish run that European stocks have been enjoying since late December has been disrupted a little, and some dealers might resort to wait-and-see mode, until Washington DC and Beijing are back on better terms.

BMW shares are a little lower this morning after the company delivered a 78% fall in first-quarter operating profit. Revenue slipped by 1% to €22.4 billion, while the consensus estimate was €22.3 billion. Net income slumped by 74% to €588 million, but is still comfortably topped the €233 million forecast. The luxury car-maker set aside €1.4 billion for a possible a fine from the EU in relation to competition laws. BMW stated it now expects margins in 2019 to be between 4.5% and 6.5%, and margins forecasts have been lowered because of the fine provision. On the bright side, the firm still holds its longer term margin forecasts of between 8% and 10%. Much of today’s bad news was already factored in, but the souring of US-China trade relations in the past few days doesn't bode well for EU carmakers like BMW.

Domino's Pizza warned that it no longer expects its international business to turn a profit. The group stated that international sales slipped by 2%, while the UK and Ireland operation posted a 4.8% jump in sales. David Wild, the CEO, described the performance at the international business as ‘disappointing’ and warned trading visibility is ‘limited’. The stock has been trending lower for 11 months, and while it holds below the 200-day moving average at 265p, its outlook is likely to remain negative.

Michael Bruce has stepped down as CEO of Purplebricks, and the group's COO, Vic Darvey has been named as his successor. The company confirmed that it was exiting its Australian operation, and the US business is under review. The firm stated it expanded too quickly, and now it seem as if the firm wants to focus on its successful markets, like the UK and Canada.

There has been little movement in the US dollar today as a lack of major macroeconomic news has prompted some currency traders to sit on their hands. German industrial orders grew by 0.6% in March, which undershot the 1.5% forecast. EUR/USD and GBP/USD are largely unchanged on the day. 

Lyft will announce their first-quarter results today, and the stock will be in play given the recent IPO. Since listing on the stock market, the share price has tumbled as the firm’s losses for last year were well over $1 billion, even though its client base has jumped considerably. Profit margin will be closely watched, and keep in mind it has improved to 26.8% in 2018, from 23.1% in 2017.

Marriott will be in focus as the group will reveal its first-quarter figures today. The hotel group is keen to fend off the rise of AirBnB, as it will launch its own house reservation service. The accommodation market is changing, and the hotel giant wants to keep up with the latest trends. Marriott have also struck a multi-year deal with Expedia as way of capturing a wider client base. 

We are expecting the Dow Jones to open 112 points lower at 26,326 and we are calling the S&P 500 down 13 points at 2,919.


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