Christmas shopping

The FTSE 100 is in positive territory heading into the close and the softer pound is helping the British index.

Europe

The eurozone equity markets are underperforming today, but it is worth noting, the DAX and CAC 40 have outperformed the FTSE 100 in recent weeks. There has been a lack of any major economic news today, and that has led to a lacklustre session. 

Ashtead shares are a little lower today after the company confirmed it had a steady third-quarter. Pre-tax profit increased by 17% and revenue rose by 19%. The company said it anticipates full-year results to be in line with the previous guidance, but the capital expenditure figure will be at the top end of the forecast. In the most recent three months, the net debt level jumped by nearly 42%, and that caused some concern. The stock has been bouncing back since late December, and if it clears the 200-day moving average at 2,096p, it might target the 2,200p region.

Debenhams have gone from bad to worse as the retailer said that profit guidance it issued in January, was ‘no longer valid’. The retailer had a string of profit warnings last year, and now this is the latest disappointment. The retailer is undergoing a restructuring programme, and it plans to close roughly 50 stores in the medium term.

GVC released respectable pro forma full-year results. Total sales jumped by 9%. The group incurred one-off costs of £434 million. The one-off costs were mostly related to takeover of Ladbrokes. The firm is embracing technology as online sales were ‘very strong’, but UK retail sales fell by 3%. The group is gaining exposure to the US market though its joint venture with MGM Resorts, and Brexit proofing is going well to as operations in Malta and Ireland will provide EU cover. The stock has been in decline throughout 2019, and a break below 600p, might bring the 526p area into play.  

US

The S&P 500 and NASDAQ 100 are fractional lower today as some dealers are sitting on the fence as there has been an absence of serious macroeconomic or geopolitical news. The US-China trade talks have gone well so far, but some investors are awaiting further developments, before making their next move.

Target shares are in demand after the company announced impressive fourth-quarter results. Earnings per share were $1.53, which just about topped the forecast of $1.52. Revenue was $22.98 billion, in line with estimates, and same-store sales increased by 5.3%, while dealers were anticipating 5.1%. Online sales grew by more than 25% for the fifth year in a row. The guidance was upbeat too, as the group predicts that full-year EPS will be in the region of $5.75 and $6.05, and analyst were predicting $5.61.

Kohl’s also announced well received fourth-quarter results.  Adjusted EPS were $2.24, which exceeded the $2.18 forecast, and revenue was $6.82, and the consensus estimate was $6.57 billion. The retailer paid down over $900 million worth of debt, and that will reduce interest payments.

Salesforce shares are in the red after the company reported figures last night. The fourth-quarter results were well received, but the outlook undershot forecasts. The prediction for first-quarter adjusted EPS is between 60 cents and 61 cents, and traders were expecting 63 cents.   

The ISM-non manufacturing report ticked up to 59.7 in February, topping the 57.3 forecast, and it was an improvement on January’s 56.7.  The new home sales report in December was 621,000, and the consensus estimate was 600,000.

FX

GBP/USD sold-off after John McDonnell, the Shadow Chancellor, said that few labour lawmakers would back the Prime Minister’s withdrawal agreement. Last week, sterling reached a seven month high against the US dollar, and today’s remarks from Mr McDonnell encouraged dealers to lock-in profits. The UK services PMI report for February came in at 51.3, while economists were expecting 49.9.

EUR/USD is lower on the day on account of the continued strength of the US dollar. The eurozone revealed largely positive services data today, as Spain and Germany showed solid growth levels, while Italy and France registered minimal growth.

Commodities

Gold is a little lower today on account of the firmer US dollar. The commodity has been in decline for the past week, and the rally in the greenback is hurting the asset If the commodity loses further ground in the near-term, it might find support in the $1,276 region.

Oil is still in demand on the back of yesterday’s report that OPEC will defer their next production decision until June, and it’s believed that the group will extend the production cuts. The restart of El Sharara oil field in Libya has capped the move to the upside.

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