Ukraine ceasefire and Cisco earnings to aid higher US market open
01:00, 12 februari 2015
· Av CMC Markets
No agreement at the Eurogroup over what to do with Greece leaves markets again left second-guessing the outcome but strong Cisco earnings and a ceasefire agreement in Ukraine is setting up US stocks for a higher open on Thursday.
Greek Prime Minister Tsipras reportedly put the kibosh on an agreed statement between European Finance Ministers at Wednesday’s Eurogroup meeting press conference leaving the negotiations rolling over until the next meeting on Monday.
The US economy is almost completely unexposed to the comparatively tiny economy of Greece but any financial market shock could easily spread across the Atlantic. Despite the problems in Europe, US stocks have been edging towards all-time highs suggesting that even a temporary agreement with Greece could spark the next leg higher.
Russian President Putin has announced all parties at peace talks have agreed on a ceasefire between Ukraine and eastern rebels starting February 15. The fighting in Ukraine had been escalating in recent weeks and risked bubbling over to financial markets so the ceasefire takes another impediment to higher stock prices out of the picture.
It was a wobbly report from Tesla overnight that could see share open lower. The electronic car company reported an unexpected loss and lower than forecast revenues alongside lower car sales in China but did beat its overall production target.
Cisco beat top and bottom line estimates in a generally strong report that should see the stock pop higher on the open.
Groupon reports fourth quarter earnings after the close. The wide spectrum of opinion over Groupon could add to the historically high volatility which has often seen the stock move more than 10% in the day following the earnings release.
Rivals Coupons.com and RetailMeNot offered weak guidance for the full-year of 2015 in part thanks to the negative impact of the strong US dollar which risks Groupon following suit. However, Black Friday and Cyber Monday sales were strong and there is a chance Groupon might divest at least some of its ‘Ticket Monster’ holdings.
The company has ongoing investment needs to help broaden its appeal away from one-off deals so there is a risk Groupon announces rising costs in the forthcoming year that could impact margins.
Shares have twice hit a ceiling around $8.30 then found support on the 200 day moving average since breaking above it in October. Should earnings impress shares have the opportunity of a fast-move towards $9.00.
More earnings are expected today from AIG, Kellogg’s, Kraft, Sprint and King Digital.
US retail sales are reported at 1.30pm GMT and are expected to show a decline of -0.4% in January. Retail sales were weak in the fourth quarter despite strong GDP and jobs growth so any signs this is abating would add to the cause of mid-year rate-hike from the Fed and as such could pose a risk to equities.
Futures suggest the:
S&P 500 will open 8 points higher at 2,076 with the
Dow Jones expected to open 72 points higher at 17,934 and the
Nasdaq 20 points higher at 4,317.
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