Equity markets in Europe are largely mixed heading into the close. 

Europe

Uncertainty in relation to the US-China trade situation is hanging over the markets, and even though stocks are well-off their recent multi-month highs, some dealers are fearful the worst is still to come. Trade talks between US and Chinese delegates will take place tomorrow and Friday, and until we have further details about the negotiations, we might see low volatility in stocks. 

JD Wetherspoon shares are down on the day after the company revealed its third-quarter trading update, and even though the numbers were largely positive, there were concerns about costs. In the 13 week period, like-for-like sales increased by 7.6% and total sales jumped by 8.4%. The group continues to review its operation, as it closed seven pubs, and opened three new pubs, and it intends to open two establishments this year. Investors are concerned about higher operational costs, and that weighed on the share price this morning.  The stock hit a record-high last month, so a pullback isn’t a surprise.

ITV shares have lost a little ground today after the group confirmed that first-quarter revenue dropped by 4%, and to make matters worse, the group expects first-half total revenue to drop by 6%. The firm still anticipates to deliver double digit growth in online revenue and ITV studios is expected to perform well in terms of revenue. The group confirmed that Britbox will be launched last this year, and it is being touted as a rival to Netflix, but some investors are sceptical about how successful the initiative will be as Netflix have a vast catalogue of content, and some of which was produced by ITV and the BBC.

Imperial Brands confirmed that tobacco volumes dropped by 6.9% in the first-half, and the group underperformed its competitors as the sector saw a 4.5% drop in tobacco volumes. Revenue and operating profit jumped by 2.3% and 38% respectively, and the popularity of its so-called next-generation products helped offset the disappointing tobacco figures. The company is moving more towards vaping products in a bid to keep up with ‘evolving lift style choices’. The group is still paying the price for not jumping on the vaping trend sooner. The stock has fallen to its lowest level in over five years, and if the bearish move continues, it might target 2,100p.

US

After all the excitement of the previous two sessions, things have calmed down in New York as the major indices have barely budged today. China’ vice premier, Liu He, will be involved in trade talks tomorrow and Friday. President Trump is content to keep collecting tariffs on Chinese imports, but he is also open to idea of striking a deal.

Lyft shares are lower today after the firm posted its first-quarter figures last night, and the loss per share was $9.02. Costs soared at the company, but management chalked that up to investment in the business. Revenue for the period was $776 million, which topped the $739 million forecast. Active riders jumped by 46% on an annual basis to 20.5 million, which topped the forecast of 19.7 million. The group’s second-quarter outlook was above expectations.  

Kraft Heinz will be in focus as the company will release its first-quarter in the next day or two. The group has been in the news recently for the wrong reasons. In February, the group announced disappointing results and the dividend was trimmed too. Kraft declared its intensions to sell-off its Maxwell House business as a part of its disinvestment programme, but there are still no buyers yet. More recently, the firm said that its previous financial statements will be revised down. 

FX

Sterling has come under pressure again as the uncertainty surrounding Brexit, and the lack of clarity in regards to the situation has chipped away at investors’ confidence in the pound. It was confirmed that the talks between the Conservative Party and the Labour Party will continue today, but traders aren’t holding out much hope. The pound lost ground against the US dollar and the euro.

USD/CAD is a little lower on the back of firmer-than-expected Canadian housing data. Last month, Canadian housing starts came in at 235,400, which topped the 196,400 forecast, and that was an improvement on the 192,000 reported in March. The greenback has been dominant against the loonie in recent months, and if the bullish move continues, it might target the 1.3521 area.    

Commodities

Gold has managed to edge higher again as investors are concerned about the trading relationship between the US and China. The recent declines in global equities has prompted some dealers to seek out assets like gold as they are deemed to be safe-havens.

Oil recouped some of the yesterday’s losses, and it saw a jump in volatility on the back of the Energy Information Administration report as US oil inventories dropped by 3.96 million barrels, while the consensus estimate was for a build of 1.21 million barrels. Gasoline stockpiles dropped by 596,000 barrels, and dealers were anticipating a draw of 434,000 barrels.

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