A strong performance from the mining, energy, consumer and healthcare sectors ensured the FTSE 100 outperformed today.
Europe
The DAX and CAC 40 are in the red, but both markets are off the lows of the session. Last night, the Federal Reserve made it clear that they won’t be hiking interest rates in the near-term, and they lowered their growth outlook to 2.1% from the 2.3% forecast in December. The announcement from the US central bank weighed on investor sentiment this morning, but traders have shrugged-off the growth downgrade, and focused on the Fed’s hint that rates won’t be hiked in the foreseeable future.
Renishaw shares sold-off sharply this morning after the company cut its full-year forecast. The group cited weaker demand in Asia for the drop in guidance. The group now expects full-year pre-tax profit to be between £117 million and £135 million, while the previous guidance was £140 million to £160 million. The engineering group derives a sizeable portion of its revenue in Asia, and the update rocked investor confidence. The stock dropped to a level not seen since July 2017 this morning, and if there is a sizeable break below the 3,600p mark, the stock might target 3,361p.
Ted Baker said that full-year group revenue increased by 4.4%, but profit before tax dropped by 26.1% to £50.9 million. It was the first yearly fall in profit since the credit crisis. Discounting and a fragile consumer spending were blamed for the fall in earnings. E-commerce sales jumped by an impressive 20%. Even though the online department is registering strong gains, the company is still opening a few stores. The clothing company knows that e-commerce is the future, so it is selective in its store opening.
Next declared that full-year group sales was £4.2 billion, and group profit before tax slipped by 0.4% to £722.9 million, while analysts were expecting £724 million. It was the third consecutive annual decline in profit. The clothing company expects full-year profit for 2019-2020 to be £715 million. The company continues to feel pain on the high street, but the online division is performing well. Annual Store sales fell by 7.9%, while e-commerce revenue jumped by 14.7%.
US
Despite the fact that the major equity index futures were trading lower this morning, the cash indices have opened higher today as traders latched onto the dovish update from the Fed last night. It would appear that policy makers are content to sit on their hands for the time being, and that has boosted investment sentiment.
Biogen shares sold-off sharply after the company confirmed that it is halting research in its Alzheimer’s drug on account of poor results. The company concluded that despite all the time and money invested in the treatment, the company believes the drug is unlikely to work.
Micron Technology shares are in demand after the company said that second-quarter EPS came in at $1.71, which topped the $1.67 forecast. Revenue for the period dropped by 20.5% to $5.84 billion, topping the estimate of $5.3 billion. Micron said it foresees a recovery in the memory chip market, and that helped the stock today.
Nike shares are slightly higher today as the company is expected to release its third-quarter numbers after the closing bell. The company received some negative publicity recently as two athletes received injuries their Nike footwear. The stock hit an all-time high yesterday so the image wasn’t hurt that much, and investors clearly have high hopes for the announcement.
Levi Strauss shares began trading today, and the stock is already 32% above its IPO price.
FX
The US dollar index has recouped some of the ground it lost yesterday on the back of the Fed’s update. The US central bank might not be seeking to hike rates anytime soon, but the US economy is still one of the strongest in the world.
EUR/USD and GBP/USD have been hurt by the firmer US dollar. The UK announced solid retail sales figures. In February, retail sales jumped by 0.4%, easily topping the -0.4% fall that economists were expecting. The figure that strips out fuel, showed a 0.2% increase, while economists were expecting a 0.4% drop.
Commodities
Palladium reached yet another record high today as the demand remains in high demand as it is used in catalytic converters. There has been some speculation about an export ban on scrap metal from Russia and that is a factor in the bullish move too.
Gold hit its highest level since late February on the back of the Fed update yesterday. The rebound in the US dollar today has weighed on the metal a little, but the commodity is still higher on the week. Gold has been in an upward trend since mid-November, and if the bullish move continues it might retest the $1,346 region.
Oil eked out a fresh four month high today before pulling back. Concerns about supply still persist in the wake of yesterday’s drop in US oil and gasoline inventories. The stockpile numbers were the latest announcement that prompted concerns about supply, as the Saudi’s made it clear they are keen to keep their production cuts in place.
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