Investor sentiment was been eroded a little today as traders were reminded that the trade dispute between the US and China is still alive and well. 

Europe

President Trump maintained his firm stance against China, and is still leaving the door open to the prospect of higher levies too. On the other side of the divide, China is equally content to maintain its hard line position against the US, and dealers trimmed some of their positions in light of recent gains.    

Boohoo had a strong start to the year, as first-quarter sales jumped 39%, and Numis Securities were expecting an increase of 38%. The online fashion house reported strong sales across all regions, and margins were essentially unchanged at 55%. The outlook was maintained as the company aims to post a 25% to 30% jump in annual sales. The group saw cash flow rise by 28%. The stock didn’t have a massive move today, and when you compare Boohoo’s performance with the likes of Ted Baker and ASOS in recent months, it’s clear that Bohohoo is one of the better performers in the fashion sector.

Inditex, is also doing well in the fashion industry. The group owns Zara and other well-known fashion brands. In the first three months of the year, revenue rose by 5%, and net profit jumped by 12%. Gross margin edged up by 6% to 59.5%, which is impressive, and the metric is closely watched by investors. The company is making further inroads into online sales, and that helped margins, and more expansion into e-commerce is in the pipeline. If the company wants to minimise the pain suffered on the high street, it needs to take a leaf out of Boohoo’s book, and draw in more online sales. Inditex said sales should be in line with the guidance of between 4% to 6% growth.     

Pendragon issued a profit warning and that sent the shares crashing.  The firm posted a loss last year, and it now foresees a loss this year. A challenging market, an increase in labour costs, and tighter margins were blamed for the negative update.

British American Tobacco continues to tick along as the firm revealed a positive update for the first six months, and it anticipates to have a good finish to the year too. Full-year operating profit should be in line with forecasts, and revenue is tipped to be at the middle-to-upper end of the guidance. Traditional tobacco products have been falling in sales, but the group hopes to see a rise in vaping products in the second-half of the year.

US

Stocks are a little lower today as there are renewed concerns about US-China trade tensions. Traders were reminded that both sides have their heels dug in, and some investors are unwinding their long positions. Headline CPI cooled to 1.8%, from 2% and it undershot the forecast of 1.9%. The core reading slipped to 2% from 2.1%, and both updates point to a dip in demand. Recently, there has been increased chatter about the US economy slowing, and the CPI update adds weight to that argument. Some traders might view the numbers as sign the Federal Reserve should lower interest rates towards the back end of the year.

Tesla shares are a little lower today after yesterday’s comments from the CEO, Elon Musk, who said the company has a ‘decent shot’ of achieving a record quarter The CEO also announced the firm is on track to achieve its volume production by the end of the year, but some traders are sceptical of such an achievement given that the group would essentially need to greatly boost production between now and the end of the year.

Dave & Buster Entertainment posted disappointing quarterly figures, and the stock sold-off on the back of the news. EPS was $1.13, but the consensus estimate was $1.15. Revenue missed forecasts too, and the group lowered its full-year forecast, and it was the latter than did the damage to the share price.  

FX

It was a quiet day on the currency markets as a lack of major economic announcements brought about relatively low volatility. The slight dip in the US inflation rate didn’t have much impact on the greenback, although we have seen a sizeable fall in the dollar in the past few weeks. Spanish inflation came in at 0.9%, and it met the consensus estimate, and EUR/USD is broadly flat on the day. The political chatter about the Conservative Party leadership race hasn’t moved GBP/USD.

Commodities

Gold has pushed higher as the risk-off attitude of traders has made the metal more popular. The increased chatter of rate cuts from the Fed has boosted gold in the past few weeks. If the metal can hold above the $1,320 mark, it might look to retest the $1,346 area.

WTI and Brent crude oil sold-off sharply after the Energy Information Administration report showed that US oil stockpiles jumped by 2.2 million barrels, while traders were expecting a drop of 480,000 barrels. Gasoline inventories grew by 764,000 barrels, which was largely in line with forecasts.For further comment from David Madden, please call 0203 003 8907 or 078 954 50516.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.