European equity markets hit a five-month high today as dealers look ahead to tomorrow’s interest rate decision in the US.
The Federal Reserve begin their two day meeting today, and some dealers are anticipating a neutral update from the US central bank. In recent months, the Fed has rowed back on its hawkish rhetoric and have moved more towards a middle-of-the-road position, and an absence of hawkish language is likely to lift investment sentiment.
Ocado confirmed the fire at the Andover fulfilment centre hurt revenue, but that impact wasn’t that bad. The online grocer said the incident was equivalent to 1.2% of sales in the first-quarter. For the three month period, retail revenue grew by 11.2%. Average order size dipped by 0.2% and average orders per week jumped by 11.3%. Ocado claimed the fire was only a temporary setback, and the numbers would suggest that too. The group plans to build a state-of-the-art replacement facility. The stock has reached a new record high this morning, and if the bullish move continues it might top 1,200p.
ASOS said the US operation held the group back. Total retail sales for the second-half increased by 11%, but the US division registered a 3% fall, while the UK business saw a 14% rise. ASOS confirmed the US unit’s performance was behind their plans, and that did the damage to investor confidence. On the bright side, the full-year sales growth and gross margin forecasts were left unchanged The stock gapped lower this morning but it has quickly recouped most of the lost ground, which is an encouraging sign.
Ferrexpo shares are in the red after the company decided to delay releasing its full-year results after it said it discovered additional discrepancies in the donations that were made to the charity Blooming Land. An independent review into the charity donations are ongoing, and they are being carried out in the UK and Ukraine. The group plans to publish its full-year results on or before 3 April.
GBP/USD was nudged higher by the solid UK jobs and earnings figures. The unemployment rate fell to 3.9% - a level not seen since the mid-1970s, and the monthly average earnings excluding bonuses held steady at 3.4% – meeting forecasts. UK politics might be in chaos, but at least the economy is ticking along nicely.
EUR/USD is a little higher this morning on the back of the slip in the US dollar. The German ZEW economic sentiment improved to -3.6, topping the forecast of -11.
FedEx will be in focus today as the company is due to release its third-quarter results after the market close. Retail has been mixed industry lately, the high street has been suffering, but the online sales have been strong, and that is where Fedex will come into play. The delivery service will be a good barometer for how well the e-commerce trade is performing.
We are expecting the Dow Jones to open 96 points higher at 26,010 and we are calling the S&P 500 up 10 points at 2,843.
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