Equity markets in Europe are higher today as traders are banking on a dovish update from the European Central Bank (ECB) this week, and dealers are also predicting the Federal Reserve will cut rates next week too.
The fact the IMF maintained their 2019 eurozone GDP forecast could be viewed as an argument that ECB should move to a more dovish position. The ECB would like a softer euro, and seeing as the Fed are tipped to lower rates later this month, the ECB might pip them to it and trim rates first.
Fevertree shares have sold-off today as the group revealed a slight cooling in gross margin, as the gross margin rate dipped to 51.9%, from 53.2%. The margin was the only weak part of the report as first-half revenue and adjusted earnings increased by 13% and 8% respectively. The drinks company confirmed that growth across all regions was solid, and the dividend was increased by 23%. The gin boom has helped Fevertree, but there are concerns the market was over hyped to begin with, and that is why the stock was driven throughout 2019.
Sainsbury’s, Tesco and Morrissons shares are all in the red today after Kantar said UK grocery sales in the 12 weeks until mid-July dropped by 0.5% - its first drop in three years. We have seen evidence of a fragile consumer climate from retailers reporting their figures, but it is worrying when the shoppers curtail spending on groceries. Within the supermarket sector, Aldi and Lidl, registered sales growth of 6.7% and 7% respectively, while the ‘big four’ all lost ground of between 2% and 2.6%.
The major indices are a little higher today as traders are still hopeful the Fed will cut rates next week, but given the IMF’s upgrade to the US growth forecast, the US central bank might not be as dovish next week as some traders are expecting.
Coca-Cola shares hit a record high as the firm posted solid second-quarter figures. EPS were 63 cents, while the consensus estimate was 61 cents, and revenue increased by 6% to $10 billion, which narrowly topped forecasts. The drinks group reported strong sales in its Coca-Cola brand and the Coca-Cola Zero brand too. The group upped its full-year outlook, and it now anticipates organic growth revenue of 5%.
Hasbro shares are in demand after the company posted solid second-quarter numbers. EPS was 78, which smashed the forecast of 50 cents. Revenue was $984.5 million and traders were expecting $956.7 billion. The franchise brands is the largest component of the group, and it registered a 14% jump in revenue.
Beyond Meat’s popularity continues as the stock has topped $200 a share – a record high. The rally has been impressive to say the least, and traders will be watching out for the group’s second-quarter results which will be released on 29 July.
Existing home sales cooled in June to 5.27 million from 5.36 million in May. The dip isn’t ideal, but the level is still well above the lows of 2019.
EUR/USD is in the red on the back of the growth projections from the IMF. The organisation raised its growth forecast for the US to 2.6%, and the previous forecast was 2.3%. The group left the eurozone GDP 2019 forecast unchanged at 1.3%. The optimistic outlook for the US economy boosted the greenback.
GBP/USD is in the red on the back of the firmer US dollar. The pound saw a jump in volatility after Boris Johnson was announced as the winner of the Conservative Party leadership race, and in turn will be the next UK Prime Minister. The UK CBI industrial order expectations reading dropped to its lowest level in over 9 nine years, and this underlines the sour sentiment in the manufacturing sector.
Gold is higher on the day, despite the rally in the greenback and the push higher in global stocks. The metal has been in a strong bullish trend for a few months, and while it holds above the $1,400 mark, the wider bullish move should continue.
Oil is slightly in the red as traders are fell fearful about the tensions surrounding Iran. Dealers are treading lightly in relation to the political standoff between Western governments and Iran, and even though things have simmered a little, the energy is likely to remain choppy.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.