Stocks rallied today thanks to the dovish announcement from the Federal Reserve yesterday.
Europe
The US central bank suggested that monetary policy could be loosened, and traders jumped on the bullish bandwagon. Investors were hoping for a dovish announcement from the Fed, and once it was delivered it sparked buying in Europe today.
Dunelm has gone from strength to strength as the group managed to increase like-for-like sales in the previous few months. This stands out from the crowd as many high street firms are struggling. Dunelm is very much aware of the surge in online business, and that is why it is devoting more resources to the online side of the business. The firm raised its full-year outlook, and this is the second time that guidance has been lifted in just over two months.
Saga Group shares have rebounded today after the stock dropped to a record-low yesterday. The rally in the wider equity markets has helped the struggling company, and bargain hunters have swooped in today. The fact remains, the firm is still suffering in terms of its tour business.
BCA Marketplace confirmed it was in acquisition talks with TDR Capital, a private equity firm, and the stock price has soared on the news. The proposal from TDR values the group at £1.9 billion.
Dixons Carphone announced that underlying pre-tax profit dropped by 22%. The group’s mobile business is expected to register a significant loss in the year ahead but should at least break even within two years. In light of the tough consumer climate, Dixons said it will speed up its cost reduction scheme, and in a bid to conserve cash the group lowered the final dividend by 33%. The stock dropped to its lowest level in over seven years in early trading, but it is off the lows of the session, which is a mildly encouraging sign.
US
The S&P 500 hit an all-time high on the back of the dovish update from the Federal Reserve yesterday. The cooling of tensions between the US and China recently have played a factor in the bullish move seen in the past two weeks. Now that the Fed meeting is out of the way, dealers will be focused on the Trump-Xi Jinping meeting at the G20 summit.
Carnival Corp shares sold-off this afternoon on the back of the company trimming its full-year guidance. The firm now anticipates full-year EPS to be between $4.25 and $4.35, while the previous guidance was for between $4.35 and $4.55. Restrictions in relation to traveling to Cuba by the US government was cited as the reason behind the decline in the forecast.
Darden Restaurants revealed broadly mixed quarterly results. Same-store sales grew by 1.6%, which was well below the 2.4% rise that traders were expecting. Sales for the quarter edged higher to $2.22 billion, which slightly undershot the forecast of $2.24 billion. The outlook failed to impress investors too as next year’s same-store sales are tipped to increase by between 1% and 2%, while the consensus estimate is 2.2%. The stock is slightly lower.
FX
The US dollar index has sold-off sharply in the wake of the Fed’ update yesterday. The greenback is in the red today as traders are taking the remarks from the US central bank last night as a sign that rates will be lowered later this year.
GBP/USD is higher thanks to the drop in the US dollar, although the update from the Bank of England (BoE) took some heat off the pound. The BoE voted nine to zero to keep monetary policy on hold, ans there were no surprises there. The UK central bank now predicts 0.0% growth in the second-quarter, and the previous forecast was 0.2%. The BoE warned that risks persists on account of global trade tensions.
EUR/USD has jumped on the back of the slide in the US dollar. It has been a quiet day in terms of economic announcements from the eurozone, and today’s upward move has been largely dollar driven.
Commodities
Gold hit a level not seen since August 2013 overnight, and even though it has retreated from the high a little, it is still well up on the session. The metal’s jump has been driven by the big fall in the greenback. If the bullish run continues it might target the $1,400 mark.
Oil surged today on account of heightened US-Iran tensions. It was reported that a US military drone was downed by the Iranian regime, and President Trump has declared the move by Iran as a ‘very big mistake’. The language from Mr Trump has driven up oil as traders fear supply in the Middle East might be squeezed by Washington DC potentially taking a tougher stance on the country.
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