Equity markets in Europe are in the red as a lack of positive news has left traders feeling a little uneasy. 

Europe

We haven’t heard any additional news regarding the US-China trade talks that ended last week, and the old concerns about a slowing global economy are still doing the rounds. The absence of clarity in relation to Brexit has some investors worried too.

Associated British Foods’ shares rallied after the company issued a positive update. The group said that Primark sales were up 4% on last year, and the operating profit margin was higher too. The fact the fashion house registered a rise in revenue and margins, made the firm stand out as many competitors had to cut prices to entice customers which hurt their margins. The sugar business continues to underperform as revenue dropped by 12% on the year. The stock has been pushing higher since January, and if the positive move continues it might retest the 2,500p region.

GVC shares are higher today after the company announced it expects full-year proforma underlying earnings to be in the range of £750 million - £755 million, which is above market expectations. Fourth-quarter net gaming revenue (NGR) increased by 5%, while the online division posted a 15% in NGR. The share price has been falling since October, and if the bearish move continues it might target the 600p area. 

Sage shares rallied after the group confirmed first-quarter revenue jumped by 7.6% Net debt fell by 9.8%. The firm has had a strong start to 2019, and it reiterated its outlook for the year. The stock gapped higher, and if it holds above its 200-day moving average at 612p, it should push higher. 

ITV shares are lower after Bank of America Merrill Lynch cut its outlook to underperform from buy, and the bank slashed its price target from 210p to 110p.

Just Eat shares have jumped after Morgan Stanley upgraded the stock to ‘overweight’.

US

Stocks are mixed as US equity markets have paused from the push higher that began late last month. The buying appetite seems to have waned as dealers don’t have any positive macro news stories to latch onto, adding to that, Morgan Stanley revealed disappointing numbers.

Morgan Stanley shares sold-off in the wake of poor fourth-quarter results. Earnings per share were 80 cents, which was well below the 89 cents that were expected. Revenue fell by 10% to $8.55 billion, while analysts were anticipating $9.3 billion. Fixed income trading fell by 30% to $564 million, and the consensus estimate was $806 million. Banks have had a poor run this reporting season, and Morgan Stanley’s numbers were some of the worst of the bunch.

US jobless claims ticked lower to 213,000 from 216,000, while economists were expecting 220,000. The US jobs market is still robust and that should stand to the economy

FX

EUR/USD is largely unchanged on the day. Eurozone headline CPI in December dropped to 1.6%, from 1.9% in November. Given the major slide in oil between October and December, the drop in the cost of living comes as no surprise. The core CPI reading held steady at 1%, meeting forecasts, it is encouraging to see that demand remained firm last month, in light of the poor economic indicators recently.

GBP/USD has crept higher after Theresa Mau survived yesterday’s no-confidence vote, but political fear still exists. The UK is set to leave the EU, and unless a new deal is reached and backed, it looks like we are heading for a no deal Brexit, but the pound doesn’t seem to reflect that. Some traders are caught up with the chatter of an extension to Article 50, and the talk of a second referendum, but for the time being we are headed towards a no deal scenario.

Commodities

Gold has edged a little lower today as the metal has shied away from the $1,300 mark again. The precious metal has been pushing higher since mid-November, and despite its lacklustre performance recently, it remains in its upward trend. A break above $1,300, might bring $1,326 into play.

Palladium racked up yet another record-high on the back of a supply deficit, and firm demand is adding to the rally too.

Oil is lower today as traders are worried about high supply levels. US production reached a record of 11.9 billion barrels per day last week, and that represents a 1.7% increase in output. The energy market began a bounce back in late December and the supply worries encouraged some profit taking.

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