European equity markets are in turmoil as traders are running scared about the prospect of an escalation in the US-China trade dispute. 

The US is set to up the ante, by raising levies and introducing more tariffs on Chinese imports tomorrow, and that has prompted dealers to cut and run. Europe is getting hit in the cross-fire because when the two largest economies in the world engage in a trade war, it bodes badly for everyone.  

Superdry shares saw a lot of volatility on the open after the fashion house issued its third profit warning in 12 months. The group had a largely poor performance for the 13 weeks until late April, as wholesale and online sales dropped by 9.3% and 3.9% respectively. It is worrying that online sales fell, seeing as e-commerce has been on the rise in recent years. Today’s update mapped out some steps to help steer the company in the right direction, and the firm intends to cut back on unnecessary discounting, and increase the number of products available online. Despite a sharp sell-off on the open, the stock is now higher on the day.

Unicredit revealed a respectable set of first-quarter results. Net profit increased by 24.7% to €1.39 billion, which topped the €1.29 billion forecast, and loan impairments were €468 million, which undershot the forecast of €553 million. The bank has major exposure to the Italian government bond market, and it intends to reduce its portfolio through run-offs. The group confirmed it is on track to achieve its 2019 targets. Today’s upbeat update might renew speculation about a possible tie-up between Unicredit and Commerzbank.

IMI shares are in the red after the company said it expects first-half organic revenue and profit to be lower when compared with last year. The group cautioned that first-quarter trading conditions were mixed, just like the final-quarter of last year. The company is a little more optimistic in its full-year outlook, and it predicts it will benefit from ongoing restructuring.

US

Stock markets are all showing big losses as trade tensions between the US and China has hammed investor sentiment again. China’ Vice Premier, Liu He, will dine with the US’s Robert Lighthizer and Steven Mnuchin today, and the meeting will be awaited with bated breath. The latest trade figures showed the trade gap with China contracted to $20.75 billion, - the smallest since March 2014, and President Trump will view that as a sign that he is winning the trade war.

US jobless claims nudged lower to 228,000, from 230.000 last week. The jobless claims rate has ticked up in recent weeks, but given that the unemployment rate is at a 50-year low, and wage growth is solid, it is fair to say the overall jobs market is strong. The headline PPI held steady at 2.2%, and the core reading remained at 2.4%, and this underlines how firm underlying demand is, and the inflation rate is less likely to rise, if the price of materials are standing still.

Chevron shares are in demand after the company confirmed it will not increase its offer for Anadarko. Chevron are in a bidding war with Occidental for the firm, but they made it clear that acquisitions are all about ‘discipline’ and the oil giant doesn’t want to win at ‘any cost’. Anadarko and Occidental are both lower today. 

Disney shares are a little lower today after the company announced positive figures last night. EPS came in at $1.61, which topped the $1.58 forecast, and revenue increased by 3% to $14.92 billion, and the consensus estimate was $14.36 billion. Disney+ will be launched later this year and it will be a rival to Netflix, given the rise in streaming TV, this is likely to become a closely watched component of the business.

FX

It has been a boring week for the currency markets, as there hasn’t been much in the way of major macro-economic news. The US dollar index has been reasonably stable, but the stand-outperformer has been the Japanese yen, as some dealers are seeking out safe-haven plays. 

Commodities

Goldhas also benefited from the risk-off strategy of traders, but when you consider how much global equities have fallen, the move to the upside in gold hasn’t been too big.  The commodity has held up in recent sessions, but its remains in its bearish move since February.

Oil is under pressure again as tensions between the US and China in relation to trade is weighing on sentiment. China is a major importer of oil and dealers are worried its demand will dip should the trade spat be protracted.

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