Equity markets are mixed today as traders remain concerned about global trade tensions.
China confirmed it would take ‘appropriate’ action if the US proceeds with tariffs, making it clear that all trade deals will be called off. Some stock markets handed back a little ground after yesterday’s surge due to the dovish update from the European Central Bank.
Rolls Royce shares are in demand after the company set out ambitious targets. The firm revealed aggressive restructuring plans yesterday, and today it confirmed the foundations were in place for a stronger future performance. Roll Royce declared it is well-placed to top its target of £1 billion free cashflow by 2020. Its medium-term free cashflow target is £1 per share, which is a considerable increase on the previous target of 15p. The stock hit a three-year high, and if the bullish move continues it could target the 1,050p region.
Tesco revealed first-quarter UK like-for-like sales of 2.1%, its tenth consecutive rise in quarterly sales. Equity analysts were anticipating growth of 1.7-2.5%, so the figure came in at the middle of the range. It is worth noting that the growth rate in the previous quarter was 2.3%, so momentum slowed a little. Tesco confirmed its growth plans are on track and is delighted with the progress made on the Booker merger. The stock hit its highest level since July 2014, and if the positive move continues it could target 280p.
H&M stated that second-quarter sales in the local currency including VAT were unchanged, and came in just below analysts’ estimates. In March, the fashion house revealed a slump in profits, and cited the cold weather and pricing discounts as the reasons for the decline. The share price has been in a downward trend for over three years, and the outlook still looks negative.
Adobe shares will be in focus today after the company revealed better-than-expected figures yesterday, but finished lower. Second-quarter earnings per share, revenue and the guidance all topped estimates, yet the stock still lost ground. The share price has been in a solid upward trend since 2010, and if the bullish move continues it could target $265.
EUR/USD has bounced back a little after the severe sell-off yesterday. At 10am (UK time), the latest eurozone CPI data is released, and economists are expecting an inflation rate of 1.9%.
At 3pm (UK time) the US University of Michigan consumer sentiment index is released, and the consensus estimate is 98.5, and that compares with 98 in May.
We are expecting the Dow Jones to open down 145 points at 25,030 and we are calling the S&P 500 down 13 points at 2,769.
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