European equity markets had a strong start to the session but the picture is looking less optimistic now, seeing as some indices are showing small losses, while others are only showing modest gains.

Europe

Given the rebound didn’t last too long, it suggests that nerves are still persist amongst traders. The stand-off between the US and Iran still continues, and the situation hasn’t changed that much. It is in nobody’s interest to start an all-out war, but at the same time, traders are wondering how the intensity of the situation can be dialled down.     

Aston Martin shares are driving lower after the group warned on profits – its second warning since July. The frim described the year as ‘disappointing’, which an understatement seeing as the stock lost 58% of its value in 2019. Margins are tipped to slip to 12.5%-13.5%. Annual profit is forecast to come in between £130 million and £140 million, which would be a big drop from the £247.3 million in the previous full-year. The stock remains in its wider bearish trend but it is still comfortably above the 400p area – a region which has provided support in recent months. 

Morrisons confirmed that group like-for-like sales excluding fuel for the 22 week period until early January dropped by 1.7%, while total sales for the period excluding fuel dropped by 1.8% Despite the not-so-hot update, the supermarket predicts that full-year earnings will be in line expectations. David Potts, the group’s CEO, said the supermarket is ‘well set for 2020’, which has helped the share price too.

888 Holding issued a sparse trading update, and the gaming firm said it began the New Year with ‘good momentum across serval regulated markets’. That being said, the firm also cautioned that poker ‘remains challenging’.  In May last year the stock fell to a level last seen in 2014, and then there was a rebound in the wake of the fall, but the stock has been largely range bound since June. Today’s update failed to spark much excitement amongst traders.       

US

Equity markets are showing slight losses as traders are still on edge about the Iranian situation. The sense of unease that traders felt in Europe has spilled over to the US. The Dow Jones and the S&P 500 are both down 0.25% so traders are not particularly worried, but dealers are likely to be treading lightly until progress on the Iranian issue has been made.  The ISM non-manufacturing hit a four month high of 55, topping the 54.5 forecast. The robust activity in the services sector is encouraging as it is offsetting the underperforming manufacturing industry.  

Apache shares have surged on the group’s joint venture with Total, Maka Central – 1, made an oil discovery. Not much was revealed in terms of details, but the find was described as ‘significant’. The stock hit a level last seen in May. 

RBC Capital issued an outperform rating for Pfizer, and the bank described the group as its ‘top idea’ as far as big pharmaceutical companies are concerned. The Canadian bank feels the firm’s dividend is strong in addition to having an undervalued balance sheet. 

FX

A broad push higher in the US dollar has hurt EUR/USD in addition to GBP/USD. The robust US non-manufacturing figure helped the dollar extend earlier gains. The eurozone posted respectable economic reports this morning, but the strength of the US dollar was too much for the single currency. The CPI reading rose to 1.3%, meeting forecasts, while the core reading held steady at 1.3% - also meeting estimates. Retail sales rose by 1% on a monthly basis, which was a decent turnaround from the 0.3% decline in the previous update. It has been a quiet days in terms of UK economic reports, so the dollar took precedence      

Commodities

Gold has retreated from its six year high that was posted yesterday, but it is still showing a gain on the day. The metal continues to be in demand even though the US dollar is firmer. Given the US-Iran situation is still tense, some traders are content to hold onto an asset that is deemed to be lower risk.

WTI plus Brent crude are showing a small losses after the massive gains that were achieved in the previous two sessions. The energy market has cooled a little but keep in mind we are still well above the levels that were seen at in advance of the US airstrike that killed the Iranian military commander. The fact there has been an absence of aggressive profit taking suggests that traders are still a bit cautious about the Iran situation.          

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