market relief

European equity markets are broadly unchanged this morning as traders don’t know which way to look.

Geopolitical tensions have taken another turn lower after Saudi Arabia intercepted a missile attack yesterday. Rising tensions in the Middle East, and the possibility of a trade war breaking out, have left some investors sitting on the fence.

The update from the Federal Reserve last night was a touch on the hawkish side, and the US central bank anticipates increased growth and inflation. This puts the idea that we could see three more interest rate hikes from the Fed this year on the table. The minutes showed concerns for the possibility of a trade war though, which could derail their hiking plans.

FirstGroup shares are higher this morning after the company rejected a bid from Apollo – a US private equity house. The transport company stated the bid was ‘opportunistic’ and ‘fundamentally’ undervalues the business. The takeover offer was unanimously rejected, which underlines how opposed FirstGroup are to the deal. Profit warnings have been commonplace at the rail and bus operator in recent years and it seems that Apollo is trying to swoop in when the company is vulnerable. The approach should motivate the board of FirstGroup to turn the business around. 

Dunelm shares are in demand after the company posted a 5.1% increase in third-quarter revenue. Online sales growth is performing well, jumping by 35.7%. The end-of-year sales put pressure on margins in the latest quarter, but the company expects margins to improve in the final quarter. No new stores have been opened recently, but there are expansion plans for later in the year – which highlights their bullish sentiment.

Carpetright shares sold-off sharply after the open on the back of the company’s restructuring plan. The firm will close 92 stores and trim 300 jobs as a part of the turnaround plan. Carpetright intends to enter a company voluntary arrangement (CVA), which needs the approval of creditors, but would give the business some much-needed breathing space. A CVA is seen as a serious sign that a business is struggling, and in the near-term investors might steer clear of the stock.

French EU harmonised inflation on an annual basis jumped to 1.7% in March, meeting expectations. It was a considerable improvement on the January figure of 1.3%. A sizeable jump in the inflation rate indicates a large increase in demand, which is positive for the French economy.

At 1.30pm (UK time) the US will announce the latest jobless claims report, and the consensus is for 230,000, which would be an improvement on last week’s reading of 242,000.

We are expecting the Dow Jones to open up 16 points at 24,205 and we are calling the S&P 500 up 1 point at 2643.

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