Concerns about global growth set in after China revealed some broadly disappointing economic data overnight. 

Europe

The fixed asset investment update topped the forecasts, but the retail sales and industrial production reports showed a large decline in growth, and this worried traders.

SThree shares are in demand after the company claimed it expects full-year net profit to top forecasts. The group said that fourth-quarter gross profit jumped by 12% and the firm now expects full-year gross profit to jump by 12%. Strong growth in mainland Europe, the US and Asia helped deliver strong results. The UK and Ireland underperformed, and the company cited uncertainty surrounding Brexit for the poor performance. SThree anticipates full-year net profit to exceed the top end of analysts’ expectations, which are between £49million and £51.4 million. The stock has been in decline since October and if the bearish move continues it might target the 250p area.

Balfour Beatty shares are in demand today after the company said it is on track to achieve its full-year target. Revenue in the first-half slipped by 8%, while pre-tax profit jumped 154%. The group expects to achieve industry standards of margin in the second-half. The order book is up over 5%, and the gross debt position is down 45%. The company has made a remarkable recovery in recent years, and the figures are all the more impressive against the likes Kier Group – who recently issued a rights issue.

GVC shares have been helped by banks, Investec and Citigroup reaffirmed their buy rating for the stock, and issued price target of £15 and £10 respectively.

US

Stocks are in the red as traders are worried about the slowdown in China. The US-China trade spat is still ongoing, but there were signs that the relationship is improving this week. The tariffs imposed on China by Trump haven’t hurt Chinese importers demand for US goods, but the economy is clearly cooling, and at some point that is likely to show up in the trade figures.

Johnson & Johnson shares have fallen today after it was reported that the company knew for decades that its baby powder contained asbestos. This is a claim that Johnson & Johnson strenuously deny, but the damage has already been done image wise.  

FX

EUR/USD sold off heavily after France and Germany revealed disappointing economic updates. The German services PMI report dropped from 53.3 to 52.5 – a five month low. The French services PMI report slumped to 49.6, and the manufacturing reading dropped to 49.7. Both readings were below 50.0, which indicates negative growth. It would appear that the protests have been taking their toll on the French economy.

GBP/USD is also in the red as uncertainty surrounding Brexit persists. Theresa May’s current proposal is very unpopular, and even though there isn’t much support for a no deal Brexit, there is a growing fear it might happen by accident.

Commodities

Goldis in the red due to the firmer US dollar. The metal and the currency have seen a strong inverse relationship recently and that is the case today. The Federal Reserve meeting next week will be closely watched as traders will be gauging how hawkish the Fed are in their outlook. The metal has been broadly rising since August, and if it holds above the $1,225 mark the upward move might continue.

Oil is lower again as the largely disappointing China data sparked fear about the state of the global economy, and in turn traders were worried about future demand for the energy. China is a major importer of oil and the Chinese industrial figures underlined the slowing economy.  

 

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.’