European equity markets have been boosted by the news that the U.S. and Canada have struck a trade deal. The agreement between U.S. and Canadian trade delegates was struck just hours before the midnight deadline, and U.S. President Donald Trump will be delighted that he managed to replace the North American Free Trade Agreement. The Mexican component of the deal was reached in August and now that the Canadian element has fallen into place, bullish sentiment is sweeping across global markets.
Ryanair shares are in the red after the company issued a profit warning, and it now expects profit to be between €1.1 billion and €1.2 billion, and that compares with the previous guidance of between €1.25 billion and €1.35 billion. The airline blamed higher fuel prices and higher flight compensation regulations, and lower air fares for the profit warning. Rising oil prices could hurt the sector as a whole, but Ryanair’s poor industrial relations could do long-term damage to the brand. Customer’s value reliability, and mass flight cancelations in the past year due to the pilot roster debacle and strikes could deter future customers, not to mention the costs incurred regarding compensation and cutting fares to attract clients. If the CEO, Michael O’ Leary, wants to put the company on the correct path, he needs to treat his staff and customers better. The stock has been in a downward trend since August 2017, and while it remains below the 50-day moving average at £1,356, it could target the £1,100 region.
United Utilities shares are in demand today after Deutsche Bank (DE:DBKGn) issued a ‘buy’ rating for the stock and raised the price target to 850p, from 820p. The announcement from the German bank comes after the utilities company issued a positive trading statement at the end of last week.
The U.S. dollar index handed back its early gains as traders booked their profits. EUR/USD is largely unchanged on the day in light of the mediocre manufacturing PMI reports from the major eurozone countries. Germany and France posted manufacturing updates that were unchanged from the preliminary readings. GBP/USD was given a little boost by the latest manufacturing report, which came in at 53.8, while economists were expecting 52.5.
Tesla shares will be in focus today after the CEO, Elon Musk, has agreed to pay a $20-million fine and step down as chairman as a punishment for tweeting he secured the funding to take the company private. The Securities and Exchange Commission could have dished out a far more severe penalty to Musk, and some traders feel he got off lightly.
We are expecting the Dow Jones to open up 217 points at 26,675 and we are calling the S&P 500 up 19 point at 2,932.