Fresh six month highs were achieved on the FTSE 100, DAX and CAC 40 today as the bullish sentiment continues.
Europe
The fact that Brexit has been delayed, and the European Central Bank are willing to launch another round of targeted lending later this year has helped investor appetite. US-China trade talks have been moving in the right direction recently, and that has been a factor too.
JD Sports shares are up on the day after the company posted a 26.8% rise in full-year earnings to £488.4 million – a record high, and revenue jumped by 49.2% to £4.71 billion. The group confirmed that total like-for-like sales jumped by more than 6%. The sports fashion division accounts for nearly 87% of group revenue, and the division registered gross margin of 49.2%, and the outdoor unit accounts for over 13% of sales, and the gross margin was 43.5%. The dividend was nudged higher to 1.44p from 1.37p, and even though it isn’t a huge pay-out, at least it is increasing. The firm is the standout performer of the retail sector, and the stock hit another record-high yesterday.
Galliford Try shares slumped after the company issued a profit warning. The company anticipates that full-year earnings will be between £30 million and £40 million below previous forecasts. Galliford are conducting a review of the business and they intend to trim the size of the construction unit, and focus on their ‘key strengths’ , and devote resources to areas that it has a track record of profitability.
Hays reported solid set of third-quarter figures as net fees for the three months period increased by 6% on a like-for-like (LFL) basis. Germany is the group’s largest market, and the division was the best performer, as LFL net fees increased by 6%, while the UK and Ireland unit, along with the Australia and New Zealand operation both posted a 3% rise in revenue on a LFL basis.
US
The bullish move on Wall Street continues as the S&P 500 has reached another six-month high, and the index has recouped the vast majority of the ground that was lost at the back end of 2018. Corporate earnings are grabbing the headlines, but an improvement in US-China trade talks, and a more dovish Fed have been the driving force in recent weeks.
Johnson and Johnsonshares are a little higher today after the company revealed respectable first-quarter figures. Adjusted earnings per share were $2.10, which topped the $2.03 forecast, and revenue for the period was fractionally higher, and came in at $20.2 billion, which comfortably exceeded the $19.61 billion consensus estimate. The firm’s legal expenses jumped on account of the lawsuits in relation to the allegations that its baby powder caused cancer. At the start of the month, the company won its latest trial in California in relation to Talc baby powder.
Bank of America announced record first-quarter earnings. EPS for the first three months came in at 70 cents, which topped the 66 cents forecast. The banks retail division performed well and was a contributor to the record first-quarter. The stock sold-off as the CFO warned that net interest income could grow at a much slower rate this year, and that over shadowed the robust figures.
Netflix will be in focus today as the streaming company will release its first-quarter results after the closing bell. The firm is still the dominant player in its sector despite Apple’s new streaming service, and Disney will be launching its own service towards the back end of the year. As always, traders will be keeping an eye on the new subscriber rate, in particular, the growth rate outside North America.
FX
EUR/USD is broadly unchanged on the day, and the improvement in the German ZEW report helped the single currency. The ZEW update swung from -3.6 in March to 3.1 in April – its highest reading in 13 months. It is encouraging to see that investment sentiment is improving, although that might be because the European Central Bank are going to launch another round of targeted liquidity in September.
GBP/USD slipped in the afternoon even though the economic indicators from the UK were respectable. The unemployment rate held steady at 3.9%, meeting forecasts’ expectations. The average earnings excluding bonuses came in at 3.4%, in line with forecasts. Sterling’s volatility has dropped off recently but while it holds above the 200-day moving average at 1.2975, its outlook should be positive.
Commodities
Gold has sold-off again, and has fallen to a level not seen since late January. The metal enjoyed a strong rally between November and mid-February, but since then the rally has run out of steam, and a break below the $1,276 region should point to further losses.
Oil is flat this afternoon as the energy has rebounded from the the declines it suffered in recent sessions. Last week, oil hit it a five month on the back of OPEC led production cuts, along with reduced output from Iran and Venezuela on account of US sanctions. There has been some selling on the oil market as there is speculation that Russia will announce an increase in production in June, but the wider bullish trend is intact.
