market relief

Stocks are subdued this morning as traders look ahead to the Federal Reserve’s announcement today, and the chatter about contradicting reports about the state of US-China trade negotiations is hanging over sentiment too.

US and China trade talks will continue next week, and some dealers are getting nervous that they have been dragging on for some time now. The Fed is tipped to keep rates on hold this evening, and some investors are expecting a neutral outlook from the US central bank. 

Kingfisher confirmed that Veronique Lauary, will be stepping down as CEO, but a departure date hasn’t been announced but the process to find a replacement has begun. Ms Lauary, launched an initiative to transform the company in 2015, but that process dragged on, and now the firm essentially gave up trying to reach their £500 million saving target. It’s the same old story at Kingfisher, where B&Q and Screwfix continue to perform well while the French, Russian and Romanian operations underperformed. Full-year underlying pre-tax profit came in at £697 million, while analysts were expecting £686 million.

Bayer shares have sold-off sharply this morning after a US jury found that the company’s weed killer, ‘Roundup’, caused cancer. This in the second time in one year a jury has come to that conclusion. This could open the floodgates to further cases, and the group might have to set aside vast sums of money for potential cases. The stock has been pushing lower since the start of the month, and a break below the December low of €58.35, might pave the way for further losses.

Kier Group swung to a loss in the first-half of the year. The firm registered a loss of £35.5 million in the six month period, and that compares with a profit before tax of £34.3 million in same period last year. The dividend was slashed by 78% to 4.9p, and the net debt position was lowered by 24.3% to £180.5 million. The company raised funds through a rights issue in December, and now it needs to focus on turning itself around.

GBP/USD has been hit by profit taking. The chatter that there will be a delay to the UK’s departure from the EU has helped the pound recently, and today dealers have taken some cash off the table. Headline UK CPI edged up to 1.9% from 1.8%, while the core CPI slipped to 1.8% from 1.9%. The rise in oil prices caused the increase in headline CPI, and the dip in the core reading suggests underlying demand is cooling.

Fedex will be in focus today after the company released disappointing third-quarter results last night. Earnings per share were $3.03, while the consensus estimate was $3.11. Revenue for the period was $17.01 billion, and that undershot the $17.67 forecast. The group lowered its outlook too. 

We are expecting the Dow Jones to open 3 points higher at 25,890 and we are calling the S&P 500 flat at 2,832.    

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