News

US-Iran tensions hit stocks, oil jumps, gold shines

Stocks have sold-off again on account of the US-Iran tensions.

Europe

The rhetoric from both sides has been upped, which has prompted traders to dump equities. The Iranian regime has suggested it will carry out an attack on US interests as a payback for the killing of one of its military commanders in Iraq last week. President Trump has warned Iran that any military response will bring about further US attacks. The tense standoff has encouraged traders to curtail their exposure to most stocks. The upheaval in the Middle East has driven up demand for BP, Royal Dutch Shell, Tullow Oil and John Wood shares.      

NMC Health shares are in the red this afternoon as the group confirmed the independent review commissioned to assess the it’s health will first review the cash positon. The full review will be published ‘as soon as possible’. Volatility is likely to taper off until the review is published.  

Hollywood Bowl received a boost from Berneberg as the bank raised its price target for the group to 310p from 280p.

Lookers’ shares continue to be in demand after it was reported in late December that Douglas Charles Anthony Bramall disclosed he upped his stake in the company to 19.44% from 18.89%. In November, the group issued its second profit warnings in under four months, but since then the share price has stabilised.

Hammerson shares are down for the fifth day in a row after it was announced that Elliott Capital Advisors trimmed its shareholding to 5% from 5.26% in late December.

US

The Dow Jones and S&P 500 are showing modest losses due to the tense situation between the US and Iran. Not that long along ago, US stocks were at record-highs, so the souring of relations in the Middle East has acted as an excuse to take some cash off the table in relation to stocks. The fact that US markets haven’t fallen that much underlines the relative strength of the indices.  

Cal-Maine Foods revealed poor second-quarter figures as the company registered a loss per share of 21 cents, while equity analysts were expecting EPS to be 3 cents. Sales in the three month period were $311.5 million, while the consensus estimate was $324 million. To add insult to injury, the group will not pay a dividend for the quarter. The group cited ‘ongoing uncertainties, geopolitical issues surrounding trade deals and international tariffs’ for the poor performance. The stock is down 11%.

Bed Bath & Beyond brokered a deal with Oak Street Real Estate Capital whereby the company will sell-off about its property, and lease it back. The transaction should generate roughly $250 million – which will come in handy for the struggling retailer.  

Exxon Mobile cautioned that its fourth-quarter operating numbers will fall when compared with one year ago. The energy giant predicts that refining operating profit will fall, and the chemicals division will post a loss.  The stock is up on the session thanks to the rise in the underlying oil market.

FX

The US dollar index is in the red following a move higher on Thursday and Friday. The greenback has been weak in recent weeks, and this could be a continuation of the wider bearish move. GBP/USD has been lifted by the softer US dollar, and the latest UK service sector data helped too. The UK final services PMI report came in at 50.0, which was an improvement on the flash reading of 49.1. Spain, Italy plus Germany posted final service PMI readings of 54.9, 51.1 and 52.9 respectively – all topped their respective flash readings. The updates helped the push EUR/USD higher. 

Commodities

Gold as hit an 81 month high as a mixture of risk-off sentiment, and a softer US dollar has prompted buying of the commodity. In light of the continued uncertainty in relation to the US-Iran situation, dealers are scrambling to snap up assets that are perceived to be lower risk, and hence why gold is in demand.

Brent crude and WTI are up on the day, but are off the highs of the session – which was achieved in the early hours. The oil market has cooled a little but political tensions between the US and Iran are running high. The energy market is likely to stay elevated while Washington DC remains at odds with Tehran.  

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