market falling stocks lower bear market

European stock markets are sharply lower this afternoon after the European Commission and Bank of England cut growth forecasts.  

Europe

Eurozone stocks are suffering greatly as investors are fearful the region could be in for an economic downturn. Brexit is on the horizon and the situation is still very unclear about what the future relationship will look like beyond 29 March. The EU also have a lot to lose should the UK leave without a deal, and the deteriorating economic condition could not come at a worse time. 

Compass Groupshares have set an all-time high today after the company released solid revenue figures and upgraded its outlook. Organic revenue for the first three months ticked up by 6.9%, and the firm now anticipates full-year revenue growth to be at the higher-end of their 4-6% target. Not many stocks are reaching all-time highs there days, so it makes the rally all the more impressive. 

TUI shares sold-off heavily after the company cut its full-year forecast. The tour operator now expects annual profit to be broadly flat on the year. The company blamed a weak pound and an unusually warm 2018 for the trimming of the guidance. TUI warned that it is unlikely to meet its previous guidance of at least 10% annual growth in underlying earnings in the three years until 2020. The stock has been pushing lower since September, and a break below 1,000p, is likely to pave the way for further losses.

Ocado warned that its revenue would be hit on account of a fire at its operation in Hampshire. The warehouse in Andover accounts for roughly 10% of the company’s capacity. We have yet to hear any financial details but investors have been spooked by the situation. 

Bellway shares are a little lower today after the company issued a mixed statement. The group expects first-half revenue to rise by more than 12%, and the company said it anticipates to sell more homes this year even though there is a serious lack of clarity in relation to Brexit. At the back end of last year, the firm embarked on a cost saving initiative, and today the home builders expects operating margins to slip to 21.5% from 22.5%, and that weighed on investment sentiment. The property market is cooling and lower margins could be the signal that earnings might fall in the years to come.

US

The Dow Jones and the S&P 500 have been dragged lower by the negative moves in Europe, and the comments from Larry Kudlow, White House economic advisor, added to the sell-off. Mr Kudlow said the US and China are still far away from a trade deal. It wasn’t overly exciting in terms of economic updates today, but the jobless claims report dropped to 234,000 from 253,000.  

Chipotle shares rallied today after the company announced strong results last night. Fourth-quarter EPS were $1.72, which easily topped the $1.37 forecast. Revenue was $1.23 billion, while traders were expecting $1.19 billion. In the final three months of the year, digital orders soared nearly 66%, and it is encouraging to see the company is embracing the change in technology.  

Twitter shares sold-off heavily today after the company announced that operating expenses will rise by 20%. The social media company confirmed that monthly active users (MAU) for the latest quarter were 321 million, which was in line with estimates, but was 2.7% lower than last year’s figure. The firm said it will no longer report MAUs beyond the first-quarter. Companies don’t usually alter their success metrics when they are going in their favour.

FX

GBP/USD has seen a volatile session. The pound initially dropped after the Bank of England of England trimmed its growth forecasts and cautioned that inflation could slide even further. Sterling staged a solid comeback after dealers realised the update wasn’t overly pessimistic, and certain amount of negative news was factored in during the week.

EUR/USD is in the red after the EU commission revised down their growth forecast for the region. The region has produced disappointing economic indicators recently, and the confirmation that lower growth is be expected hit the single currency.   

Commodities

Gold has crept today after a largely negative week. The metal has been pushing higher since mid-November, and since it managed to hold above the $1,300 mark overnight, it might resume the wider bullish move. The commodity might seek to retest the $1,326 area.

Oil is in the red as traders are worried about supply levels. Yesterday, the Energy Information Administration report showed that US inventories jumped by nearly 1.3 million barrels. Adding to that, US oil output reached a record high too. 

 

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 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.

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.