The FTSE 100 is in the red heading into the close as a broad-based sell-off has hurt the British equity benchmark. 

Europe

Energy, consumer and healthcare stocks are among the biggest fallers in London. Volatility has been low as most European markets are closed for May Day.  

Sainsbury’s shares are higher today after the company posted broadly positive figures. Annual underlying full-year pre-tax profit increased by 7.8% to £635 million, which exceeded forecasts. Total sales edged up by 2.1% to £32.4, billion, but it is worth noting that like-for-like (LFL) sales dipped by 0.2% on the year, and they dropped by 0.9% in the final-quarter. It is a little concerning that LFL sales slipped, and the company will need to come up with a new strategy now that the regulator blocked the Asda merger. Sainsbury’s are keen to invest more in online sales, and even though it is a longer-term play, it seems like a sensible move given the changes in consumer habits.

Next confirmed that first-quarter sales jumped by 4.5%. It is the same old story with the fashion house, whereby the online division offset the poor high street performance. Store sales dropped by 3.6% and online revenue jumped by 11.8%.  The ‘Beast from the East’ last year made this year’s Spring figures look good as the bar was set low ,and retailer maintained its full-year outlook, which indicates they probably don’t want to get ahead of themselves.

Persimmon shares are a little lower today after the group confirmed that first-quarter sales dropped by 5%, and forward sales were a little weaker too. The conduction firm said it has waited to sell some houses closer to the completion date, rather than the previous strategy, of mostly selling off the plans. The average selling price was largely unchanged at £237,850.

US

Stocks are slightly higher ahead of the Federal Reserve’s update, helped by a good performance from Apple.

The ADP employment report surged to 275,000 in April, comfortably topping the 180,000 forecast. The March report was revised higher to 151,000, from 129,000. When you take into account that the jobless claims rate recently moved off a 50 year low, and that wages are outpacing inflation, it paints a positive picture of the US economy. The Federal Reserve are likely to keep rates on hold this evening, and seeing as we have seen some soft economic updates recently, the tone is likely to be neutral to dovish.

Apple shares have hit their highest level since November after the company posted solid second-quarter figures last night. EPS came in at $2.46, which was at the top end of estimates, and revenue was $58.02 billion, and the consensus estimate was $57.37 billion. The services division had a record performance in terms of revenue, and the group guidance for the third-quarter was lifted. 

Mondelez’s share price has hit an all-time high after the company posted impressive first-quarter figures. The EPS and revenue both topped their forecasts, Organic revenue in the three month period increased by 3.7%, and Latin American and Asia were some of the best performers in terms of organic growth. 

FX

The US dollar index continues to retreat from the multi-month highs in hit last week, and today we are seeing a push higher in EUR/USD and GBP/USD. It has been a quiet day in terms of European economic news. UK manufacturing PMI slipped to 53.1, but it topped the 53 forecast. 

Commodities

Gold is a little in the red, which is concerning given that the US dollar is lower again. Traders might be sitting on their hands ahead of the Fed this evening ,and the bank is tipped to maintain their policy, and issue a statement ,that is somewhere between neutral and dovish.

Oil was nudged lower by the massive build in US oil inventories. According to the Energy Information Administration, US stockpiles jumped by 9.93 million barrels, while an increase of only 1.48 million barrels was anticipated.  Given the jump in stockpiles, and relatively small move lower in oil, the market might continue its wider bullish move.

 

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