Stock markets in Europe are in positive territory as we approach the end of the trading session.

The mood is bullish as medical reports from China suggest the coronavirus crisis is expanding at a slower rate. The number of new confirmed cases was fallen to its lowest level since the crisis began, so some dealers are taking the view the worst of the health emergency is behind us – although some medical experts disagree. The impression is the Chinese government are more in control of the crisis, and that has boosted sentiment. The FTSE 100 hit its highest level since late January, while the DAX has set yet another record high.

Dunelm continues to buck the trend for retailers as the company had a solid first-half – where pre-tax profit and revenue increased by 19.4% and 6% respectively. The third-quarter period has ‘started well’. As it stands Dunelm has not suffered any financial or material impact on account of the coronavirus situation, but the group are keeping an eye on the crisis. Not many firms operating in the retail sector are saying that full-year profits will exceed the top end of forecasts, which has set Dunelm apart from the herd.          

TUI AG has handed back some of the impressive gains from yesterday as traders are keen to book some profits. The travel company raised its full-year revenue outlook, which was bullish seeing as consumer activity has been fragile recently. In light of the robust report yesterday, the following banks hiked their price targets for the firm, Morgan Stanley, Stifel as well as Barclays

ABN Amro have been hurt by high loan impairments as well as lower interest income. Fourth-quarter net income was largely unchanged on the year at €316 million, but the consensus estimate was €429 million. Income from interest fell by 3%, and given the eurozone’s interest environment the lending business is likely to remain under pressure. It’s not ideal the bread and butter lending business is being squeezed but at least the balance sheet is still strong. The CET1 ratio – a popular liquidity metric, sits at 18.1%, while the level one year ago was 18.4%.

US

The Dow Jones as well as the S&P 500 have notched up all-times again as the positive run knows no bounds. Traders were already optimistic yesterday as tentative signs the health situation in China was improving, so now dealers are even more optimistic in light of the report showing a drop off in the infection rate in China. Fed Chair, Jerome Powell was speaking in front of lawmakers again today, but his commentary had little impact on stocks.     

Lyft posted positive figures last night but the stock is in the red as the group feel they will not turn profitable until the final quarter of 2021. Keep in mind that Uber recently brought forward their target to turn profitable by one year, so traders were possibly expecting something similar from the group. In the final-quarter, Lyft posted revenue of $1.02 billion, while traders were expecting $984 million. It was the first time that quarterly revenue topped the $1 billion mark so the business is clearly gaining traction with clients.     

Bed Bath & Beyond shares slumped on the back of a poor update. Same-store-sales for December as well as January dropped by 5.4%. Equity analysts are expecting a fall of 3.97% for the fourth-quarter – the figures will be posted in April. The struggling retailer blamed inventory issues as well as a rise in promotional activity for the poor sales figures. Mark Tritton took over as CEO in late last year so he has a tough task ahead of him. Mr Tritton claimed the group is suffering from ‘short-term pain’, but traders will want to see positive results in the next couple of quarters.   

FX

EUR/USD is in the red as the poor industrial production figures weigh on the single currency. The reading which covered the currency bloc showed a 2.1% decline in December, which was way below the 1.6% decline that economists were expecting. The economic report isn’t usually very influential but it has been a quiet day in terms of news, and it is worth noting that it was a particularly poor reading.

GBP/USD made an attempt on the 1.3000 mark earlier in the session but has since retreated. There were no major economic announcements from the UK or the US today so volatility in the currency pair has been lows.    

Commodities

Gold has been hit by the risk-on attitude of traders again .Solid gains in European as well as US stock has dented the commodity as traders are keen to take on more risk, which in turn entails dumping lower risk assets like gold. The inverse relationship between gold and the metal is a factor too, and the firmer greenback is weighing on it also.   

Oil has rebounded sharply on reports the coronavirus situation appears to be growing at a slower rate. The medical data points to the smallest increase in the number of confirmed cases since the crisis began, which has encouraged dealers to swoop in and snap up relatively cheap oil futures. The health crisis has caused oil refiners in China to state they will cut back on processing.  The health emergency has prompted OPEC to lower its demand forecast by 200,000 barrels per day to 29.30 million barrels per day. WTI as well as Brent crude handed back some of the major ground they made on account of the Energy Information Administration report, which showed a jump in oil stockpiles of 7.47 million barrels.

 

Disclaimer: 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.