Summary:
-
Further gains seen in US benchmarks
-
Dow set for record open despite Home Depot miss
-
HD.US cuts 2019 forecast after sales disappoint
Technical breakouts higher in European bourses swept the US indices along with futures in all 3 major benchmarks making new all-time highs this morning. There was little by the way of a clear catalyst behind the moves although a bounce in Asian equities overnight no doubt played a part in boosting sentiment. There is still yet to be confirmation of a “phase 1” trade deal but for now investors don’t seem to be hanging around and until there’s a change in market structure the path of least resistance remains higher.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
The Dow Jones Industrial Average is set to begin at its highest ever level this afternoon. The market has rallied over 2400 points from the early October low and while price is getting a little stretched with an RSI reading of 73.9, this isn’t too extreme and is lower than previous peaks. Source: xStation
Even though the market is still called to open higher there has been a bit of a pullback after one of its larger components announced a disappointing trading update. Home Depot, which has a weighting of just under 6% on the broader DJIA index, is trading firmly lower in the pre-market and the release of the firm’s latest results had a clear negative impact on the benchmark. To give a rough idea of the imapct the stock can have, when it was trading down by 4.8% in the pre-market this translated to a 78-point drop in the Dow. The results for the 3rd quarter were as follows:
-
Earnings per share: $2.53 vs %2.52 exp
-
Revenue: $27.22B vs $27.53B exp
-
Global same-store sales growth: 3.6% s 4.7% exp
The miss in turnover and slower pace of same-store sales growth are two clear negatives here and another aspect weighing on the stock is that forecast for 2019 sales to now grow by 1.8% compared to 2.3% in the prior estimate. The stock at one point was on track to open down by around 5% which would put shares on course for their worst day since February 2018, but these declines have pared a little since.
Shares in Home Depot ended at their highest ever level last night but are called to open somewhere around 230 this afternoon after the latest trading update. Below there the 222 level could be one to keep an eye on. The stock has enjoyed a strong push higher over much of the year, rising by 50%. Source: xStation
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
