It was reported the European Central Bank (ECB) are going to hold discussions on the design of a new targeted loans scheme. 

Europe

 

The announcement gave European stocks a lift, and traders will be paying close attention to tomorrow’s update. The central bank have a track record of talking about a scheme well in advance of it being actually launched, so this story might do the rounds. Despite the ECB report, stocks are largely offside this afternoon.  

Just Eat shares reported solid full-year figures, but the firm expressed concerns about the digital sales tax. Annual revenue jumped by 43% to £779.5 million. Earnings increased by 6% to £173.9 million. The group have been heavily investing in the company, and that is why there was a big jump in sales. The outlook is optimistic too, as the company predicts that 2019’s revenue will be between £1 billion and £1.1 billion, and the earnings are expected to be in the region of £185 million to £205 million. The group’s Canadian operation is expected to register a profit next year. Just Eat are worried about the digital sales tax that is in the pipeline, and they pointed out they are paying full tax on profits in the UK. Cat Rock Capital Management have been pushing for Just Eat to merge with Takeaway.com, but Just Eat are content to hold their own. The stock has been pushing higher since November and if the bullish move continues it might target the 800p area.

Legal and General announced that annual operating profit jumped by 10%. Annuity sales rose to £10 billion – a record level. Assets under movement at the investment division topped £1 trillion. Gross written premiums at the general insurance unit ticked up by 11%. The dividend was raised by 7%. The numbers were largely positive, but there were some concerns about margins and the solvency measure undershot some forecasts. The stock is in the red after today after it reached a 10 month high yesterday.

Paddy Power Betfair shares are a little lower today after the gaming company said that expansion costs brought about a drop in profits. Full-year sales increased by 9%, while pre-tax profits fell by 11%. The group has been investing money in the US as part of its expansion scheme. Changes in US laws has prompted European gaming companies to invest in the country, and this comes at a time when tighter regulation in the UK and Australia is impacting their operations. The group will rebrand itself as ‘Flutter Entertainment’ later this year as a way of focusing on online business and US expansion. 

US

Stocks are a little lower as traders have become impatient with the lack of news in relation to US-China trade. The bounce back in stocks since late December has run out a steam a little. 

The ADP employment report was 183,000, and the consensus estimate was 189,000, but the January figure was revised to 3000,000 from 213,000. The huge upward revision ties in with the impressive non-farm payroll figure reported last month. Rising imports and falling exports, caused the trade deficit to widen to $57.9 billion. The dip in exports might be because of the weaker global demand.

Brown-Forman, the maker of Jack Daniels, announced that third-quarter EPS jumped by 20.5% to 47 cents, while analysts were expecting 45 cents. Revenue for the period increased by 3% to $904 million, which undershot the $911 million forecast.  The drinks company confirmed that tariffs impacted their business. The full-year outlook is largely in line with analysts predictions.

Abercrombie & Fitch shares are in demand after the company’s reported strong sales, and the outlook was optimistic too. The fashion house confirmed that the latest quarterly same-store-sales jumped by 3%, easily topping the 1.47% consensus estimate. Adding to that, the fashion house predicts that full-year net sales will be between $3.66 billion and $3.73 billion, and equity analysts were expecting $3.61 billion. The stock gapped higher today, and if it holds above the 200-day moving average at $22.02, it might target the $27.00 region.

FX

EUR/USD is largely unchanged on the day .The currency pair was dragged around by the US ADP report, and the announcement that the ECB are looking into another round of targeted liquidity.

GBP/USD remains weak as dealers are holding out little hope for Theresa May’s withdrawal agreement .Volatility was low today as there were no major economic announcements from the UK.

USD/CAD hit a two-month high after the Bank of Canada (BoC) kept rates on hold at 1.75% - meeting forecasts. The BoC cautioned that the slowdown in the global economy is more widespread than previously thought. 

Commodities

Gold has edged lower on the back of the firmer greenback. The metal has been in decline for the past weeks, but if it holds above yesterday’s low, it might retest the $1,300 mark. It is worth noting, the commodity has been in a strong upward trend for over three months. 

Oil saw a surge in volatility on back of the Energy Information Administration report that showed that oil inventories jumped by 7.06 million barrels, which topped the forecast of 1.2 million barrels. Gasoline inventories declined by 4.22 million barrels, and the consensus estimate was for a drop of 2.08 million barrels.   

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