market relief

Stocks are in the red as the concerns about China’s economy are still doing the rounds. 

Europe

The fear of a global slowdown is playing on traders minds’ and the major equity benchmarks in Europe are lower this afternoon. The geopolitical situation isn’t looking too hot at the moment and traders are nervous.

BHP Billiton issued a production update and the guidance for 2019 remains unchanged for iron ore, petroleum, and energy coal. Total copper production guidance has been raised. The group said that unplanned production outages at the Olympic Dam and Western Australia iron ore costed the firm approximately $600 million.

EasyJet shares are in demand today after the airline issued an upbeat outlook, despite the impact of the drone at Gatwick airport incident. The company expects full-year capacity to grow by 10%, and it foresees 15% capacity growth in the first-half of 2019. The airline confirmed that booking for the first-half of 2019 has been ‘encouraging’. The drone incident cost the firm £10 million in customer welfare costs, and an additional £5 million due to cancelled flights and lost revenue. The stock has been pushing higher since mid-December, and a break above 1,288p might bring the 1,400p region into play.

UBS shares are in the red after the bank posted a 2% rise in fourth-quarter pre-tax profit to just over 2% to $862 million, which undershot the consensus estimate of $985 million The financial firm saw client outflows of nearly $13 billion, and the bank blamed the downbeat economic climate for the poor performance.

Credit Suisse CEO, Tidjane Thiam, expects conditions to improve after a difficult fourth-quarter. The bank said that assets under management have been resilient, but that it is not worried about the Chinese economy in the long-term.   

Kier Group shares are higher after the company confirmed it is on track to meet expectations. The group said the results will be weighted towards the second-half of the year. The order book for 2019 is healthy, and net debt dropped by 45% last year. The CEO, Haydn Mursell announced his departure and he will leave the business with immediate effect. The firm seems to be on firmer ground now and that has helped investor confidence.

Royal Dutch Shell shares are in the red after Morgan Stanley downgraded the bank to underweight from equal-weight.  The investment bank warned the oil titan is devoting a large amount of cash to debt reduction, and dividends, and it might hurt capital expenditure in the medium-term.

John Wood Group shares are lower today after the stock was downgraded from outperform to neutral. The bank expressed concerns about the oil company’s accounting system and said the debt reduction targets might be difficult to achieve.

US

Stocks are lower at the US open for business this week after being shut for Martin Luther King Jr Day yesterday. The slowdown in the Chinese economy, combined the ongoing concerns about the Washington DC &ndash Beijing trading relationship has put pressure on stocks. 

Johnson & Johnson shares are in the red after the company posted solid fourth-quarter earnings, but the outlook wasn’t as rosy as traders had hoped. Fourth-quarter EPS were $1.97, topping the $1.95 forecast. Revenue was $20.4 billion, ahead of the $20.2 billion forecast. Full-year 2019 EPS are forecast to be in the range of $8.50 and $8.65, while analysts pencilled in $8.60. The revenue forecast is between $80.4 billion and $81.2 billion, and the consensus estimate was $82.69. 

FX

GBP/USD is higher on the back of the solid economic updates from the UK. Average three month earnings until November on a yearly basis grew by 3.4%, topping the forecast of 3.3%.It was the highest reading since the credit crisis. The unemployment rate slipped back to 4% - its joint lowest level since 1975.

EUR/USD is in the red due to the firmer US dollar and the poor data from Germany. The German ZEW reading in January was -15, while economists were expecting a reading of -18.4 and the December reading was -17.5. The report might have come in ahead of expectations but the reading has been negative for 10 months, and that highlights the poor economic sentiment.

Commodities

Goldhas bounced back after the two previous negative sessions. The metal has been in a strong upward trend for two months, and if the bullish move continues it might target the $1,300 area.  

Palladium is in the red again as traders lock in their profits. The metal surged last week as supply is relatively low and demand is high as the metal is used in the production of catalytic converters. Despite the recent pullback, it remains it is wider upward trend, so we might see buyers enter the fold.

Oil is lower today as investors remain nervous about the cooling of the Chinese economy, and that feeds into the story of a global slowdown.

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