market relief

European markets are in positive territory as we approach the close. 

Europe

It has been a relatively quiet day in terms of macroeconomic data, and a lack of negative news has given traders an incentive to go long. The political climate hasn’t really improved, but more importantly for dealers, it hasn’t worsened.

Ocado shares are in the red after the company revealed sales figures that were weaker than the previous quarter. First-quarter revenue slipped by 3% on a quarter-on-quarter basis, but they jumped by 12% when compared with the same period last year. The adverse weather was cited as a reason for the slightly weaker start to the new financial year. The online grocer is expanding at home and abroad, with warehouses in the UK at ‘maximum capacity’ and the site at Erith ‘on track’. The stock is down 0.7% today, but it has been in a solid upward trend since November, and we might see new buyers enter the fold.

BHP Billiton was upgraded by Exane BNP Paribas, after the bank raised its rating on the stock to outperform from neutral, and the price target was raised by 11% to 1505p. Shares in BHP Billiton are up 1% at 1405p.

Just Eat has lost ground in the past two sessions as brokers have lowered their price target for the company. Yesterday Peel Hunt trimmed their price target from 1199p to 950p, and today Morgan Stanley lowered its price target to 780p from 790p. Last week we saw JP Morgan and UBS reduce their price target for the company. The stock is down 3% at 714p.

US

Sentiment on Wall Street has improved as traders are keen to go bargain hunting. The possibility of a trade war hasn’t gone away, but for now the fears have subsided. There were no major economic announcements from the US today so traders had little to go on, and the attitude has been: no news is good news.

There is increased chatter about four potential interest-rate hikes from the Federal Reserve this year, even though this comes at a time when geopolitical tensions are higher than normal. The call for four rate hikes is bullish, but it seems to ignore the possibility of protectionist policies.

Social media stocks like Facebook, Twitter and Snap are in the red today, as the Cambridge Analytica story is still doing the rounds. The revelation that the data analytics company harvested Facebook profiles for political campaigns has soured the social media sector.  

FX

EUR/USD is weaker on the day after the German ZEW economic sentiment report dropped from 17.8 to 5.1 – an 18-month low. The possibility of a trade war with the US has shaken investor confidence in Germany, as the country is a major exporter to the US. The stark drop in investor confidence in the largest country in the eurozone has rattled the single currency. 

GBP/USD had a rocky ride today as the UK released its latest inflation figures. In February, the UK CPI rate slipped to 2.7% from 3%, while economists were expecting a reading of 2.8%. The core inflation figure jumped from 2.2% in January to 2.4% in February – meeting estimates. Shortly after the report, the pound climbed against the US dollar, but in the afternoon it turned lower.

Commodities

Gold is grinding lower on account of the strong US dollar. The Federal Reserve begin their two-day meeting today, and the interest-rate decision and statement will be released tomorrow. It is widely expected the US central bank will hike interest rates by 0.25% to 1.75%. The press conference that follows will be closely watched as traders will be trying to figure out how hawkish the Fed are in their outlook.

Brent Crude and WTI are higher today as tensions are rising in the Middle East. The US could reimpose sanctions on Iran – which is one of the largest oil producers in the world. Tensions between Saudi Arabia and Iran are also playing to the higher oil price.

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