Equity markets are higher again as traders are taking their cues from China – where stocks rebounded from the brutal losses that were endured yesterday.
Europe
The coronavirus crisis is unfortunately getting worse, but the authorities in China have been doing their bit to reassure investors. The Securities Times, a state controlled newspaper, called for calm in the markets. It was also reported that in the past 48 hours the regulator of the financial markets has imposed restrictions in relation to short-selling. Also, there are more stringent rules for fund managers trying to unload their positions. The positive finish in China overnight has coaxed bulls into the market today, but whether the positive move can be sustained it’s a different story. The FTSE 100 is also being assisted by the rebound in oil as well as copper as energy and mining stocks are showing strong gains.
BPshares have had a bad run of it recently on account of the dramatic fall-off in the underlying oil market. The stock pushed higher today on the back of the full-year figures. Underlying replacement cost profit is popular metric to measure profitability oil companies, and the level dropped by over 20% to $10 billion, but traders were expecting $9.7 billion. It was a similar story with the fourth-quarter results as earnings declined by over 25% to $2.6 billion, but it topped the $2.08 billion forecast. Next year the group expects the costs associated with the Gulf of Mexico disaster to be below $1 billion, which would be a decent drop from the $2.4 billion costs incurred this year. Even though earnings are in decline, and more costs are in the pipeline in relation to the Gulf of Mexico, the firm upped its quarterly dividend. It seems like a ploy to try and keep shareholders on side while the business is underperforming.
Micro Focus shares are in the red as the company had a ‘challenging’ year. The full-year figures showed that revenue and operating profit declined by 29.6% and 41.2% respectively. Today’s update was particularly painful seeing as the company has issued a few profit warnings in the recent years. The company said that Brexit uncertainty caused clients to hold-off on software purchases, but the problems relating to the integration of Hewlett Packard Enterprises has been hanging over the company for a while.
Ferguson shares hit another record-high after the group plans to conduct a share buyback scheme of up to $500 million. The group is in the process of the spinning of its UK business – Wosley, and it is considering floating the US business.
US
The Dow Jones as well as the S&P 500 are higher on the session as the rebound in equities continues. Dealers in New York are picking up on the positive sentiment in the Europe and China. The S&P 500 has now recovered all the losses that were posted on Friday, which is a positive sign US factory orders jumped by 1.8% in December, which was a sharp rebound from the 1.2% registered in November.
Tesla shares are still on a bullish path as they have set yet another all-time high. There is an enormous amount of excitement surrounding the stock at the moment, and the very impressive quarterly results last week sparked this acceleration.
Alphabet shares are in the red this afternoon after the company posted mixed quarterly figures last night. EPS were $15.35, exceeding the $12.53 forecast. The company posted a 52% jump in annual cloud revenue to $8.92 billion. The YouTube unit saw annual revenue jump by more than 35% to $15.15 billion. Despite the strong performances at other divisions the group revenue came in at $46.08 billion, missing the forecast of $46.94 billion. Traders are slightly worried that Google’s revenue segment is running out of steam.
FX
GBP/USD in modestly higher after the sizeable drop yesterday. Short covering and bargain hunting have helped the pound claw back some of the ground lost yesterday. The UK construction PMI reading was 48.8, topping the 46.6 forecast. It was an improvement on the 44.4 posted in December. EUR/USD is in the red on account of the wider push higher in the greenback. Eurozone PPI came in at -0.7%, meeting forecasts, but volatility has been low.
Commodities
WTI and Brent crude are driving higher for a change on talk that OPEC+ are considering cutting production by 800,000 to 1 million barrels per day in a bid to prop up the oil market. The commodity has taken a beating recently on account of Chinese demand fears, so the oil market was relatively cheap, and then bargain hunters stepped in on the back of the production cut report.
Gold is in the red today as traders are in risk-off mode today. Stock markets in Europe as well as the US are extending their gains, and in turn money is being extracted from assets like gold. The metal is lower on the day but it still remains in the wider upward trend. Further declines might find support at $1,536.
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