It has been a volatile session in Europe today.

Europe

The European Central Bank (ECB) announced a new series of targeted loans and the scheme will come into effect in September, and the bank said it now expects rates to remain on hold throughout 2019. Growth guidance for this year and next has been trimmed. The move initially propelled the major eurozone equity markets into positive territory, but the move was shorted lived. The underlying message from the ECB was negative, and that played out in the stock market. The FTSE 100 has been hit by a sell-off in mining and financial stocks.

Aviva shares are in the red today after the company announced it plans to change the way it pays dividends. The new pay out policy will be progressive and the dividend will be maintained or increased depending on how well the business does. The group wants to pay down debt in order to save on interest payments. Aviva’s investment management unit saw operating profits fall by 11% and assets under management slipped. The company confirmed that full-year operating profit increased by 2%, but it cautioned about Brexit uncertainties and ‘muted growth’.

Greggs announced that full-year sales exceeded the £1 billion pound mark for the first time. The bakery company recently launched a vegan sausage roll, and it proved to be a hit. The company has had a great start to the year, as like-for-like sales jumped by 9.6% in the first seven weeks of trading Annual pre-tax profits jumped by 15% and the firm aims to pay a special dividend in the summer. The stock briefly hit an all-time high in early trading, and if the wider bullish move continues it might target the 1,900p area. 

Melrose shares are in demand after the company revealed a strong set of results. The group’s ‘terrific’ takeover of GKN saw the annual loss widen to £550 million, but when you remove the cost associated with the GKN move, profit was £703 million, which exceeded the firm’s forecast. The turnaround of GKN is going well. Melrose upped its final dividend by 10%.

Rio Tinto shares are in the red today Societe Generale cut its rating for the company to ‘sell’ from ‘hold’, but they raised the price target to 3,880p, from 3,830p. The French bank also lowered its rating for BHP Billiton to ‘hold’ from ‘buy’ and trimmed the price target to 1,680p from 1,780p.

US

The S&P 500 and the NASDAQ 100 are in the red as the poor sentiment has spilled over to New York. US investors are running out of patience with the lack of detail in relation to the US-China trade situation, and the downbeat update from the ECB added to the sour sentiment.

Kroger shares sold-off after the company announced disappointing fourth-quarter figures. Net income per shares dropped by 66% to 32 cents. Earnings per share was 48 cents, while equity analysts were expecting 52 cents. Revenue slipped by 9.5% to $28.09 billion, which missed the $28.38 billion prediction. The retailer’s outlook was largely below the consensus estimate. 

FX

The US dollar index hit a level not seen since mid-December as the move lower in the euro, drove the currency higher.

EUR/USD is in the red on the back of the ECB’s update. The central bank lowered the GDP forecast for the euro-area for the 2019 and 2020, and stated that a new round of targeted liquidity would begin in September. The update pushed the euro to its lowest level against the US dollar in over two weeks.

GBP/USD is lower on account of the stronger US dollar. According to Halifax, the average UK house prices jumped by 5.9% on a month-on-month basis in February, topping the forecast of 0.1%, and a major improvement on the -3% registered in January. Sterling’s upward move was short lived, and the dollar’s dominance took over. 

Commodities

Gold has been hit by the firmer US dollar. The inverse relationship between the metal and the commodity continues to play out. The metal has been in decline for over two weeks, and if the negative move continues, it might target the $1,276 region. 

Oil is largely unchanged as traders are still mindful of the mixed Energy Information Administration data was a released yesterday. US oil stockpiles surged, while gasoline inventories dropped off. OPEC and allies are tightening their production in order to support prices, and that is a factor too. 

 

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