Brexit is at the forefront of traders' minds this afternoon as they look ahead to this evening’s vote in the House of Commons, where MPs will decide whether to back or reject Theresa May’s withdrawal agreement.

Europe

Early indications suggest the proposal will be defeated, and this could be a major problem for politics all over Europe, not just the UK.  The major European indices spent time in both positive and negative territory today, and now they are largely unchanged on the session. 

Dominos shares are higher after the company had a ‘mixed year’. Full-year group system sales edged up by 9%, while underlying profit before tax slipped by 1.1%. The UK and Ireland accounts for roughly 90% of the group’s business, and the combined region posted a 7% rise in system sales. The international operation continues to play catch-up, and it registered a 7.7% rise in pro forma sales. The company paid generous returns to shareholders. In total, £103.5 million was returned, which was made up of £44.3 million in the form of dividends, and £59.2 million was returned in the form of share buybacks. The net debt position soared by 128% to £203.3 million – which is still at the lower end of their debt to earnings ratio. It seems odd that the company is boosting shareholder returns while racking up debt at the same time. The stock drove higher in early trading, and if it can hold above the 223p region, it might extend it gains.

Cairn Energy reported a full-year net loss after tax of $1.1 billion. The loss was largely down to write down in the company’s India investments. The group had an operating loss of $182 million from impairments in relation to its Kraken North Sea field. Cairn also confirmed that the output from Kraken was ‘below expectations’ The group expects net production of between 19,000 and 22,000 barrel of oil per day, and the average cost per barrel is $20, which should lead to high profits given the current price of oil.

888 confirmed that full-year adjusted profit before tax jumped by 11%, even though revenue dipped by 2%. The group’s sports operation and casino business posted a 6% and 8% jump in revenue respectively. Tighter regulation in the UK was blamed for a poor performance at the bingo unit. 888 is continuing its expansion into the US as a way of diversifying away from the UK. The group is taking measures to minimise risks against Brexit as it obtained a gaming licence in Malta, and it set up a server in Ireland. 

US

The Dow Jones is in the slightly lower today on account of its relatively large exposure to Boeing ,while the S&P 500 and NASDAQ 100 are registering gains, in fact the tech focused index hit a level not seen since November.  

Boeing shares are in the red again after the UK aviation authority announced that no Boeing 737 Max planes will be allowed to operate in its airspace. Adding to Boeing woes was the news that Norwegian Air will ground all its Boeing 737 Max passenger jets. The Irish, German and French governments have banned the plane from their airspace too. Investors are worried that more aviation authorities and airlines will follow suit.  

Dicks Sporting Goods shares are in the red after the company posted mixed fourth-quarter results. Adjusted earnings per share were $1.22, topping the forecast of $1.06. Revenue slipped by 6.3% to $2.49 billion, while analysts were expecting $2.48 billion. Same-store-sales declined by 3.7%. The company hopes to be back to same-store-sales growth by the second-quarter. The retailer said it expects full-year EPS to be between $3.15 and $3.35, and the consensus estimate was $3.34. 

US CPI dropped to 1.5% from 1.6% in January and traders were expecting it to remain unchanged on the month. The core inflation rate also dipped it. It fell to 2.1% from 2.2%. It is a little concerning that core inflation is falling as it suggests that demand is softening, but when you take into account that average early wages grew by 3.4% - in the latest jobs report, workers are getting a decent increase in real wages. 

FX

GBP/USD saw a lot of volatility today. The pond was initially trading higher versus the US dollar, but after Geoffrey Cox MP and Attorney General stated the legal risk of the withdrawal agreement remained unchanged. The update from Mr Cox sent the pound tumbling. Lawmakers are due to vote on the new and slightly improved withdrawal agreement tonight, but political commentators believe there is little chance of it being passed.     

The US dollar index has sold-off and the poor inflation figure added to the currency’s declines. EUR/USD has pushed higher by the dip in the greenback.

Commodities

Gold has been given a lift on the back of the softer US dollar. The metal has been in a broadly upward trend since mid-November and if it holds above the $1,276 region, it might retest the $1,320 area.

Oil is higher today on the back of Saudi production cuts, and supply issues in Venezuela. Saudi Arabia will maintain its production cuts throughout April, and the output will be well below the OPEC agreed level of output. Power outages in Venezuela hit the state-controlled firm PDVSA , which impacted exports.

 

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