Europe lacks spark with US closed for MLK day
Unsurprisingly Europe has been very quiet this morning, sticking in a tight range on pretty low volume with the US closed for Martin Luther King Day. Without the US, we are a bit light on fresh data to see the markets want to pull too hard in either direction, with Chinese GDP numbers providing the focal point of the day so far.
Chinese GDP growth dipped to its lowest level since 1999 at 7.7%, but still came in 0.1% ahead of estimates and on balance it seems Europe hasn’t really taken too much from it. You would tip the rest of the day to remain very subdued in the absence of anything new.
For single stocks the big story on the continent this morning was Deutsche bank, who reported a “surprise” pre-tax loss of E1.15bln for Q4 on litigation and restructuring costs. Commentary this morning would indicate the market has been thrown a curveball by the figures, but previous releases have given us warning signs that there would be heavy impairments in Q4, while their extended lawsuits and regulatory issues where already well documented. If this news was the shock some are making it out to be, I doubt we would be only 5% down on the day and holding near 10% up for January.
Mothercare investors got a welcome boost this morning after a January to forget so far. Like many well established names that come under serious pressure, they have been the subject of bid speculation over the weekend, with Tesco’s emerging as a potential buyer. According to sources, the supermarket giant considered a bid around 6 months ago and although the plan was originally put on hold, a 40% drop in the price tag might be enough to tempt Tesco into some bargain hunting in the January sales. While there has been no bid from Tesco so far, it’s a deal that makes more sense than 6 months ago, from both a value perspective and given the recent pressure on Tesco’s sales.
Shell has agreed to sell a stake in LNG joint venture in Australia for $1.14 billion to Kuwait’s Foreign Petroleum Exploration Company. Shell have committed to remaining a major player in Australia’s energy industry, but the stock was still lower on the news, which follows a steep drop last Friday after issuing a profit warning.
RBS has lost more ground this morning following last week’s speculation as to the future of the Bank, with the Telegraph running a story over the weekend that estimates government losses of up to £10bln on its majority stake when it is privatised. For Ed Milliband, the drastic shrinking of both risk and size since that fateful day in 2008 is not enough, and he still plans to break up the bank if he were to win the election, which would dilute any taxpayer return further.
CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.