market relief

Stock markets are higher this morning as it seems President Trump is willing to hold off on his plans to introduce tariffs on imported steel and aluminium.

With the US president keen to put ‘America first’, it now appears that the talk of tariffs was a ploy to improving his position in relation to altering the North American Free Trade Agreement (NAFTA), to the advantage of the US. As the prospect of a trade war has cooled, traders are now feeling more confident about snapping up equities.

Just Eat revealed a solid set of figures, but the weaker-than-expected forecast and higher-than-anticipated investment plans took the shine off the numbers. Revenue jumped by 45% and gross profit increased by 32%, while the company is increasing its customer base at home and abroad. The earnings outlook was 23% below analysts’ estimates, however, and the company plans to spend £50 million in investment to keep ahead of its rivals. The combination of increased investment and a softer-than-expected outlook sent the share price to its lowest level since October. The stock has been in a strong upward trend since August 2014, so we might see some bargain hunters enter the fold.

Shares in Smurfit Kappa are up 18.5% after the company rejected an unsolicited approach from International Paper. It was revealed the takeover approach ‘fails entirely to reflect the group growth prospects’. The move has driven up the share price of other companies in the paper and packaging industry, such as DS Smith and Mondi.

At 3pm (UK time) the latest US factory orders figures are unveiled, and the consensus is for a decline of 1.3%, compared with a 1.7% increase in December.

The US dollar index is largely unchanged this morning after it emerged last night that President Trump would consider holding off on imposing tariffs on steel and aluminium imports if NAFTA can be tweaked to make it more beneficial for the US.

There are no major economic announcements from the UK or the eurozone this morning so we may see little movement in GBP/USD and EUR/USD.

We are expecting the Dow Jones to open up 71 points at 24,945 and we are calling the S&P 500 up 5 points at 2725.

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