market relief

European equity markets have been drifting lower this morning as trade fears persist. 

The FTSE 100 is in positive territory as consumer and healthcare stocks are stronger, but continental markets are lower. The standoff between the US and China has worried investors that the EU could be in line for similar treatment. 

Daimler shares are in the red after the company issued a profit warning. The carmaker confirmed that Chinese tariffs on US vehicles will dent profit. In April, the company saw first-quarter revenue rise by 3% on the back of record car sales, and the full-year guidance was lifted. Daimler is now predicting lower earnings due to the levies, and this is evidence that the escalating trade tensions between the US and China has the potential to hurt companies. The stock has fallen to its lowest level since August 2016, and if the bearish move continues it could target 5,500 cents. 

DunedinSmaller Companies investment trust is to be merged with Standard Life UK Smaller Companies. The transaction needs to be approved, but the move will bring total assets under management at the new group to £550 million. Dunedin confirmed its relatively small size made it harder to attract new investors, and the merger is likely to rectify this.

Dixons Carphone announced a 23.6% fall in pre-tax profit to £382 million, and this was broadly in line with previous guidance. The company predicts next year’s profit will fall to £300 million The retailer kept its dividend unchanged on the year, and this did a lot to steady investor confidence. The company confirmed it had ‘plenty of work to do’ in turning around the business. Last month, the firm revealed plans to close 92 stores, and traders will be keeping an eye on its progress in the coming months.

At 12pm (UK time) the Bank of England (BoE) will announce its interest rate decision, and no change is expected to the interest rate or stimulus package. The voting breakdown and the summary of the meeting could provide future clues as to what the BoE will do further down the line.

GBP/USD remains weak after better-than-expected net borrowing figures failed to boost the pound. In May, the UK public sector net borrowing was £3.35 billion, while economists were expecting £5 billion.

Barnes & Noble will be in focus today after the company revealed better-than-expected earnings per share and revenue yesterday. 

We are expecting the Dow Jones to open down 77 points at 24,580 and we are calling the S&P 500 down 7 points at 2,760.

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