Stocks are mixed this morning with traders cautious about being overly long going into the weekend.
President Trump’s rhetoric in relation to Syria has dialled down and this has removed some of the fear in the market, but as the situation is yet to be resolved, investors aren’t particularly optimistic.
Sage Group shares have plunged after the company cut its full-year guidance, as organic revenue missed the first-half forecast. The company previously expected 7.4% revenue growth, but have now lowered it to 6.3%. An ‘inconsistent operational execution’ was cited for the reduction in the target. Sage stated that slippages in relation to some contracts in the Middle East and the US brought about the slide in margin, but those issues are expected to be resolved in the second half of the financial year. Cloud computing is a lucrative and rapidly expanding business, and Sage’s cloud division revenue jumped by 57%.
Fundamentally, the business is still strong, but as the stock has gapped lower twice in four months, technical traders are worried.
Hammerson shares are under pressure after Klepierre walked away from its takeover attempt of the company. In the past month, the French firm made two offers for Hammerson, before this morning declaring it is no longer interested in the business. Real estate investment trusts (REITs) have been feeling the pinch recently over uncertainty regarding Brexit, and retail centres are experiencing a decline in footfall as online shopping continues to rise. Consolidation in the sector may be a way to fend off the pressure, but now Hammerson will have to explore other options to try and buck the downward trend the stock has been in for three years.
EUR/USD is largely unchanged after German inflation met economists’ expectations. In March, on a yearly basis, German inflation jumped to 1.6%, up from 1.4%. This morning, Spanish CPI also increased, as did French CPI, which was released yesterday. The rise in the cost of living in major eurozone countries points to an increase in demand, which is good for economic growth.
At 3pm (UK time) the US will announce the University of Michigan consumer sentiment survey for April, and the consensus is for a reading of 100.5, down from 102 in March.
We are expecting the Dow Jones to open up 22 points at 24,505 and we are calling the S&P 500 flat at 2664.