market relief

European stocks are a touch higher this morning as bargain hunters swoop in. 

Yesterday’s severe sell-off has attracted some buying this morning, but given the state of geopolitics, the bounce back may not last long.

The US has launched an investigation into imported car parts on the grounds of national security. The timing isn’t great seeing as trade talks between the US and China have reached a bit of a rough patch, and this is likely to rattle global investor sentiment. Carmakers like BMW, Daimler and Volkswagen have been hit on the back of the US’s decision.

Shares in Talktalk are higher today after the company added 109,000 new customers – its best quarter ever. As a part of a strategic move, the company has agreed to sell its business-to-business division to Daisy Group for £175 million. The restructuring costs hit the bottom line as earnings fell by 35% to £233 million, in line with expectations. The company still expects earnings to grow by 15% next year. The share price has been bouncing back since February, and if the positive move continues it could target 140p.

Kingfisher shares are in the red after the company announced a 4% drop in like-for-like first-quarter sales. The ‘unusually adverse’ weather in February and March lead to a drop off in footfall. The company already warned that outlook in the UK was ‘uncertain’ in March, and those fears have been confirmed today. B&Q stores suffered from ‘soft demand’, and the adverse weather only made matters worse. The news wasn’t all bad, as Screwfix, the wholesale business, saw comparable sales rise by 3.6%, and 10 new stores were opened. The share price has been in decline since late 2016, and if the downward trend continues it could target 260p. 

GBP/USD jumped after the UK reported a 1.6% jump in retail sales in April, which easily exceeded the consensus estimate of 0.7%, and was a major improvement on the 1.2% drop we saw in March.

We are expecting the Dow Jones to open down 16 points at 24,870 and we are calling the S&P 500 flat at 2,733.

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