It has been a positive start for markets in Europe this morning, with the FTSE100 leading the way buoyed by outperformance in travel and leisure stocks as well as the basic resources sector, with commodity prices sitting at 8-year highs.

Travel and leisure stocks are getting a lift this morning after yesterday’s announcement of a reopening schedule in the UK prompted a surge in holiday bookings, with EasyJet reporting a big jump in summer ticket sales, particularly in August, in the wake of last night’s announcement by Boris Johnson.

IAG, TUI Travel as well as Premier Inn owner Whitbread have seen some decent gains in early trade this morning, while Rolls Royce shares are also higher as markets price in a significant pickup in air travel by the end of the summer.

Hotel chain IHG shares are also higher, despite posting a sharp decline in full year revenues in its latest numbers this morning. The hotel business has been another area hit hard by the pandemic, and this morning’s full year numbers from Intercontinental Hotels Group, who own Holiday Inn, illustrate this quite starkly, as full year revenues fell to $992m, down from last year's $2.08bn. Revenue per room fell by 52.5%, as the overall business reported an operating loss of $153m.

Looking ahead the business is looking to extract another $75m of cost savings as it looks to gear itself up for a reopening of the business later this year.

Both BP and Royal Dutch Shell are also higher on the back of crude oil prices which are at 13 month highs.

HSBC has had its fair share of problems over the last 12 months, from navigating the intricacies of US/China relations over its business in Hong Kong, as well as its involvement in the spat between China and the US over Huawei, and the arrest of its Huawei CFO Meng Wanzhou in Canada, the bank is also in the middle of a 3-year restructuring program, as it seeks to cut costs and improve profitability.

Forced to cut its dividend last year by the UK’s PRA as the COVID-19 crisis rippled across the world the bank said in Q3 that it hoped it would be able to start paying a dividend when it reported its full year numbers at the end of current fiscal year. The bank has delivered on that aspiration this morning, despite a 34% fall in profits, announcing a dividend payment of $0.15c a share.

While this appears to be a little on the low side, CFO Ewen Stevenson said that this was because the bank wanted to strike the right balance between paying out to shareholders, and taking advantage of future growth opportunities.

Pre-tax profits for 2020 came in at $8.78bn, slightly above expectations, but well below last year's $13.4bn, adding another $2.2bn of profits in Q4.

There was some speculation in the leadup to the numbers that HSBC might well be leaning towards a greater focus on its Asia markets which contributes the bulk of its profits. This speculation appears to be well founded and while it is caught in the crossfire of US/China relations it appears to have taken the decision to follow the money. The bank said it was looking to shift $100bn of capital to Asia, while also shifting a raft of key management positions out of the UK into Hong Kong, as it looks to focus on wealth management.

Loan loss provisions came in at $8.82bn, which was very much at the lower end of expectations of the $8bn to $13bn target range, and that these are expected to drop quite sharply in 2021.

In November there was some chatter that the bank may well be looking to explore various options with respect to its US retail operation, including the sale thereof, and these appear to be ongoing with the bank saying it continues to look at options here. There are a number of areas of its global portfolio that are currently underperforming, including the operations in France, which could well be offloaded, or cut back significantly.  

Aviva has continued its pivot towards its core markets of UK, Ireland and Canada this morning by announcing the sale of its French business to Aema Group for €3.2bn in cash, ahead of the announcement of its full year numbers which are due next week.

Unsurprisingly, given the unwillingness of Gardaworld to improve its previous 235p offer for G4S, management of the security business have recommended its shareholders accept the 245p offer from Allied Universal.

The latest UK unemployment numbers didn’t offer up too much in the way of surprises, edging up to 5.1% for the three months to December, and a five-year high. The number of redundancies rose again by 30k to 343k for the three months to December.

On a more positive note, the number of payrolled employees rose by 83k in January, however the number of jobs lost is still more than 700k lower than a year ago. With an economic reopening still more than 2 months away next week’s budget by Chancellor of Exchequer Rishi Sunak takes on an even greater importance in the context of the extension of support measures that have been in place for most of the last 10 months.

To that end there was little reaction to this morning’s numbers from the pound, which remained steady just below 1.4100 against the US dollar, while UK gilt yields are slightly higher at 0.71%, up at 11-month highs.

Oil prices are continuing to look resilient, with Brent prices up at 13-month highs, amidst speculation we could well see a move up to $70 a barrel, in the coming weeks. US prices in particular are starting to look as if they could well see further gains as it becomes apparent that the damage to infrastructure caused by the cold snap may take some time to fix.   

Bitcoin has also continued its recent slide from yesterday’s peaks, now back below $50k after Tesla CEO Elon Musk admitted the price was a bit high. Given the stake Tesla has in the cryptocurrency this could translate into a lower open for the electric car maker when US markets open later.      

After yesterday’s big decline in the Nasdaq, US markets look set for a modest rebound, with the Nasdaq having found a modicum of support at the 50-day MA which has held up the current uptrend since early November.

The spat between Facebook and the Australian government appears to be closer to some form of conclusion after the social media company said it would restore access to news pages for Australian users in the coming days.

On the earnings front we’ll be getting the latest Q4 numbers from DIY retailer Home Depot and Macys, the department store, before the US market opens.

As an insight into the US consumer these could be a useful bellwether of consumer demand in the US, though if recent US retail sales data is any guide there is certainly scope for disappointment.

Fed chair Jay Powell’s comments to the Senate Banking Committee later today are also likely to be a key focus especially given where long term bond yields are right now. With US 10-year yields falling just shy of 1.4% yesterday, there is a concern that US central bankers are being a little bit too blasé about inflation risks, particularly in the face of the large-scale stimulus plan which is currently making its way through Capitol Hill this week.

Dow Jones is expected to open 75 points higher at 31,596.

S&P500 is expected to open 11 point higher at 3,887.

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