European equity markets are in positive territory heading into the close. 

Europe

There hasn’t much in the way of major macro-economic news, but sentiment is still a little on the optimistic side in light of the mixed US jobs report on Friday, and investors have digested the European Central Bank’s update from last week too. Investors are still waiting to hear further details in relation to the US-China trade situation. The rally in sterling has stripped away some of the FTSE 100’s gains. 

Debenhamsreported that it is in advanced talks about borrowing £150 million, which would be vital for its restructuring plans, and its ability to stay afloat. Should the company manage to secure the £150 million, it would pay down £40 million of lending it secured last month. The struggling retailer is trying to fend off a takeover from Mike Ashley, and securing this financing would be essential to seeing off Mr Ashley’s advances. The stock initially traded higher this morning, but it has since turned lower on the day.

Kier Group shares are in the red this morning after the company upped its debt estimate. The firm previously announced that its net debt position was £130 million, and now they have revised it to over £180 million. The company aims to lower its debt position and it hopes for a net cash position by the end of June. Putting the debt issue to one side, Kier said they anticipate to meet their underlying 2019 target. In late November 2018, the company launched a rights issue because it was concerned about banks unwillingness to lend to the construction sector. The latest debt fiasco has rocked investment sentiment further. The stock has been in decline since September, and a break below 400p, might bring the 335p area into play.  

Cairn Energy confirmed that it expects further delays to the arbitration result. The energy firm is claiming $1.4 billion against the Indian authorities in relation to ‘retrospective taxation actions’ and it is confident in its claim, but it now feels the process will be delayed. The stock gapped lower, and while its remains below the 200-day moving average at 208p, its outlook should remain negative.

US

The Dow Jones, S&P 500 and NASDAQ 100 are all in positive territory as sentiment is strong in New York. Dealers have shrugged off the growth worries of last week, and investors are buying back into the market. The Dow Jones was initially down on the day because of it’s relatively large exposure to Boeing, but since the stock has moved off the lows of the session, the index is now in positive territory.

Boeing shares sold-off sharply today in the wake of the terrible news that a Boeing 737 plane crashed over the weekend, and there were no survivors from the Ethiopian airlines flight. The tragedy was the second Boeing 737 crash in five months, and the news prompted China, Ethiopia and Indonesia to ground all flights of Boeings 737 flights. The stocks is still in the red, it is off the lows of the day.  

Tech shares are in demand today after positive broker ratings encouraged buying. Apple shares received a boost from Bank of America Merrill Lynch, who upgraded the stock to buy from neutral. The Wall Street titan upped their target price to $210 from $180. Facebookshares are in demand also after Nomura raised its rating to buy from neutral, and lifted the price target to $215 from $172.

US retail sales increased by 0.2% in January, topping the 0% forecast, and the December figure was revised from -1.2% to -1.6%. The retail sales figure that strips auto sales showed an increase of 0.9%, while economists were expecting 0.3% growth. The December figure was revised to -2.1% from -1.8%. The negative revisions to the December numbers took the shine off the report. It seems that savvy shoppers held back from spending in December, and took advantage of cut prices in January.

FX

GBP/USD has rallied today as Prime Minister May is set to fly out to Strasbourg this evening to meet European Commission President Jean-Claude Junker. Traders are speculating that the two will finalise the deal ahead of the meaningful vote in the House of Commons on Tuesday.

EUR/USD hasn’t moved much today as there were no major economic reports from the eurozone. The single currency has recouped some of the ground it lost on Thursday on the back of the European Central Bank targeted lending scheme announcement, but the downtrend from January is still intact.

Commodities

Gold is lower as the metal has reversed some of the gains it made on Friday. Despite the recent negative move, gold has been in an upward trend since mid-November, and if it holds above the $1,276 area, it might remain in the bullish move.

Oil is higher today after Saudi Arabia indicated that their production cuts will run beyond April. The oil producing nation is the unofficial head of OPEC, and the group will meet next month, and in June. It was suggested there will be no change to OPEC’s policy at next month’s meeting. 

 

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