The London market is outperforming its European counterparts as easing rumours out of China have made the mineral stocks move higher. Beijing is looking to relax its lending policies to stimulate economic activity and this has given a second wind to the battered mining sector. Continental Europe has cooled off in the wake of the buying frenzy that was triggered by the European Central Bank quantitative easing programme.
Shares in ASOS have accelerated this morning after the online fashion house reported solid second-quarter figures. The UK division is still by far the biggest contributor to the group profits but the jump in US and EU sales has proven that ASOS is making moves in international markets. The company is slowly regaining market confidence after issuing three profits warnings last year, so the recent stable share price is a welcome change from the boom and bust of a few years ago.
Morrisons' turnaround has been hampered by a property writedown of just over £1.2 billion. Its new CEO will start next week and the launch of the new convenience stores has been delayed. Until these get underway the share price recovery will be constrained.
Home Retail Group finished the year on a weak note as both Homebase and Argos suffered declines in fourth-quarter sales. The large drop in sales at Argos is particularly worrying as it’s meant to be the breadwinner of the two.
Across the pond we are expecting the Dow Jones to open 35 points higher at 17,670 as the fear of an interest rate hike from the US during the summer is still in the back of traders’ minds. The US index futures are missing out on the buying euphoria that has engulfed Europe on the back of the ECB’s QE scheme.