Stocks are lower today in light of the Federal Reserve interest-rate hike and hawkish message last night, and investors are cautious of the European Central Bank (ECB) meeting today.
Dealers are anticipating the ECB to lay the groundwork for winding down the stimulus package.
Rolls Royce shares are higher today after the company confirmed plans to cut 4,600 jobs. The firm aims to save £400 million per year by the end of 2020. The restructuring will reduce the headcount of support staff and management by 10%. Cash will be freed up to invest in areas of the business like digital technologies and electric propulsion. The company will host an investor day tomorrow, and traders will be listening out for how the company plans to generate profit after 2020. The firm derives a large amount of its revenue from after-sales services, and this will be in focus. While the stock remains below its 200-day moving average at 872p, its outlook might stay negative.
Majestic Wines announced respectable full-year figures. Revenue and pre-tax profit jumped by 2.3% and 33% respectively, and both figures were broadly in line with expectations. The group confirmed it is still on track to achieve its target of £500 million in revenue by 2019. The total dividend was upped by 40% to 7.2p, topping the consensus estimate of 5.67p, and the company is hoping to continue with a progressive dividend policy. Rowan Gormley, the CEO, issued a cautious outlook, and warned this year ‘could be tougher’ than last year. The stock is slightly lower.
GBP/USD jolted higher in the wake of the impressive UK retail sales report. In May, retail sales jumped by 1.3% on a monthly basis, while economists were anticipating 0.5%. The April report was revised higher from 1.6% to 1.8%. Last month there were two bank holidays and a royal wedding, so it shouldn’t have come as a surprise that the figure was strong.
EUR/USD is rising in advance of the ECB meeting at 12.45pm (UK time), and the press conference at 1.30pm (UK time). Traders are expecting rates to remain on hold, but we are likely to hear about plans for the stimulus package to be brought to an end. There is speculation the ECB will wind down its bond-buying scheme this year, and that is propping up the single currency against the US dollar.
Yesterday Comcast launched a $65 billion bid for 21st Century Fox’s assets, which Disney are trying to acquire, so we could see a bidding war for Fox’s units. Comcast were eyeing up Fox for a while, and the move was triggered when a federal judge gave the green light for AT&T’s merger with Time Warner.
We are expecting the Dow Jones to open down 16 points at 25,185 and we are calling the S&P 500 down 1 point at 2,774.
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