European equity market are higher this morning as the feel good factor in global equities is still doing the rounds.
Last night, the Federal Reserve minutes revealed that US central bankers are optimistic the new US tax reforms will bring about higher economic growth. Some Fed members are less optimistic than others, but overall their outlook is positive.
Debenhams had a disappointing Christmas period and the retailer has issued a profit warning. The retailer cited a ‘volatile and competitive’ market for the drop in sales. Debenhams now predicts that full-year profits will be within the range of £55 million to £65 million, which is a considerable decline on the previous forecast of £83 million. The stock has been in decline for over five years, and if this trend continues it could target 20p.
EUR/USD has resumed its upward trend after the service PMI reports from major eurozone counties were well received. Germany’s services sector expended to its highest level since in nearly two years. The pullback in the US dollar in the wake of the Fed minutes last night is assisting the single currency too.
GBP/USD was given a boost by the increase in the expansion rate of the services sector. In December the reading ticked up to 54.2 from 53.8, and seeing as the services sector is the biggest component of the British economy, the pound is higher on the back of it.
The US will announce the ADP employment report and the initial jobless claims at 1.15pm (UK time) and 1.30pm (UK time) respectively. The ADP is expected to show an increase of 190,000, and traders are expecting initial jobless claims to come in at 240,000. These figures will be closely watched as they will set the tone for tomorrow’s US non-farm payrolls report.
We are expecting the Dow Jones to open up 62 points at 24,984, and we are calling the S&P 500 up 2 points at 2715.
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