Good morning everyone,
Morrison’s kicked off the Christmas trading updates for UK supermarkets this morning with a gloomy warning which revealed falling sales and a challenging outlook. The group said like-for-like sales for the first 22 weeks of its second half, including the all-important Christmas period, were down 1.7%. It added: “Throughout the period, trading conditions remained challenging and the customer uncertainty of the last year was sustained”. Nevertheless, this fall in sales is actually less than analysts predicted and as such, the shares have received a boost this morning. The company did also say that they are on track to meet their full year forecasts, which may be the silver lining for investors in what was for the most part a downbeat update.
We can see below the shares have been trading in a range since last September between 192p and 204p. It will be interesting to see what the catalyst will be to see a breakout either way.
Cyber security rally amid Iran hack fears
Meanwhile in US stocks, shares in cyber security firms jumped on Monday on fears that US-Iran tensions could lead to cyber attacks against the US. CrowdStrike, which has been involved in high profile investigations such as the Russian hackers breaching the Democratic National Committee’s computer systems, closed more than 8% higher. FireEye and Palo Alto Networks finished 2.2% and 1.4% higher respectively. All 3 of these companies are constituents of eToro’s CyberSecurity CopyPortfolio which gives diversified access to the sector as a whole
The latest US action against Iran adds to fears reported earlier in the year that Iran had stepped up offensive cyberattacks against the US government.
Analyst upgrade sends Salesforce soaring
After opening lower in a continuation of Friday’s Iran-related rout, the major US indices climbed back to deliver a positive day on Monday. The S&P 500 finished 0.48% higher, with Salesforce one of the companies leading the way. The $154bn San Francisco-based cloud software giant closed 4.4% higher after RBC Capital raised its rating on the stock to a top pick. Analyst Alex Zukin pointed to the firm’s 20% plus revenue growth guidance, and the fact that growth is not dependent on acquisitions. At the other end of the spectrum, sportswear firm Under Armour found itself at the back of the pack after JPMorgan downgraded the stock to a neutral rating. Its share price closed 6.5% lower on the news, and the company has now lost more than 20% of its value in the past six months. Xerox was also in focus after it announced it has secured $24bn in financing as it continues to pursue a $33bn takeover over of the far larger HP.
S&P 500: +0.35% Monday, +0.48% YTD
Dow Jones Industrial Average: +0.24% Monday, +0.58% YTD
Nasdaq Composite: +0.56% Monday, +1.1% YTD
BP continues to lead the FTSE 100
UK stocks continued their Friday slide on Monday, with the FTSE 100 index finishing 0.62% down, and the FTSE 250 down more than 1%. Economic data showing a rebound in the UK services sector in December failed to counter negative sentiment stemming from geopolitical tensions. Nonetheless there were some clear winners, including BP which led the FTSE 100 after climbing 2% on the back of another day of oil price rises. Defense giant BAE Systems also jumped 1.3%. At the bottom of the blue-chip index were NMC Health and Hikma Pharmaceuticals which closed 4.5% and 3.7% lower.
FTSE 100: -0.62% Monday, +0.44% YTD
FTSE 250: -1.04% Monday, -0.56% YTD
What to watch
Gregg’s (GRG.L): The UK baker had a storming 2019, finishing 80% higher with much success attributed to their introduction of a vegan sausage roll, which proved to be a real hit. For those outside the UK who may be unfamiliar, see below:
They will release a trading update tomorrow that shortly follows the launch of their second meat and dairy free product – the vegan steak bake. Can another plant-based pastry propel them to more success in 2020?
Sainsbury’s (SBRY.L): Sainsbury’s will join Morrison’s in reporting their Christmas trading numbers before the market opens tomorrow. Whilst analysts predict a difficult period for the sector as a whole, Kantar numbers have Sainsbury’s sales falling the least out of the big four.
US trade deficit: The US Commerce Department will put out November trade deficit figures on Tuesday, providing a view into whether slowing global growth is impacting the US. It will also act as a temperature check on the US-China trade balance. A continued narrowing in the US’ overall trade deficit, which came in at $47.2bn in October, could mean trade ends up contributing to US economic growth for the last quarter of 2019 (as the ratio of what the US exports versus what it imports would be turning in its favour). However, unpicking the numbers is not that simple. A reduction in imports of consumer electronic goods for instance, could be both a result of US tariffs and a symptom of slowing US consumer demand.
Crypto assets continued to spike overnight, Bitcoin was today up more than 3%, closing in on the $8,000 mark, and is now trading at its highest level since late November. It’s worth noting that there is some key resistance around this level, which could prove a hurdle. That said, if it manages to break out there is scope for the price to really push on.
Binance stablecoin receives NYDFS approval
Binance (BUSD) is a proprietary cryptoasset backed by US dollars. This approval by the New York State Department of Financial Services (NYDFS) means BUSD can now be purchased with fiat currency. Binance have pitched this as a government-friendly alternative to Facebook’s Libra.
XRP to be delisted by exchange backed by Japan’s LINE
Bitbox will delist XRP after a 15% price surge, the reason behind it is likely due to low liquidity and volume. These conditions could be specific to this exchange as users prefer to use other platforms. This is a blow as Bitbox is operated by Japanese messaging giant LINE, which allowed its 80 million users access to purchase XRP through the exchange.
South Korea recommends Bitcoin to be listed directly on KRX
A South Korean government committee has proposed that Bitcoin should be listed directly on the Korea Exchange (KRX). This would be a huge step to see Bitcoin as well as bitcoin derivatives available on a national exchange. The committee also promoted more favourable conditions for institutional investors to deal in cryptoassets via over the counter (OTC) desks.
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