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Markets are called to open lower this morning. This is what's happening today:
Global stocks beat all other investments for a second quarter, the first back-to-back outperformance since 2009, as accelerating economic growth pushed equities past commodities, bonds and the dollar. The MSCI All-Country World Index of equities in 45 markets climbed 6.6% including dividends in the first three months of 2013, as the Nikkei 225 Stock Average surged 20% and US shares reached records. The Standard & Poor’s GSCI Total Return Index of 24 raw materials added 0.6%, while the Dollar Index climbed 4% and bonds of all types returned 0.6% as of March 31, according to Bank of America Merrill Lynch’s Global Broad Market Index.
Global equity values rose by $2.6 trillion as data from retail sales to employment and housing showed the US economy gaining momentum and the Bank of Japan doubled its inflation target. Federal Reserve Chairman Ben S. Bernanke said he will continue to provide monetary stimulus. Slowing growth in China damped demand for commodities, while the Dollar Index strengthened as a bailout for Cyprus reignited concern that Europe’s debt crisis isn’t over.
China’s manufacturing expanded at a faster pace last month, indicating a recovery in the world’s second-largest economy is sustaining momentum. The Purchasing Managers’ Index was 50.9, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing, an 11-month high and up from 50.1 in February. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4. Readings above 50 indicate expansion.
McDonald's (Price $99.69, Price Target $108)
McDonald's offers compelling value for consumers in a time of stretched wallets, which should support sales growth in a difficult economic environment. The company also enjoys internal drivers to improve sales, including new products, restaurant reimaging, extended hours, expansion of breakfast and improved operating efficiency. MCD is also well-positioned for steady unit growth internationally, particularly in emerging markets such as Russia and China. The combination of steady same store sales growth and 1-2% global unit growth annually should drive margins higher over time given MCD's relatively fixed cost structure. Finally, valuation is compelling, with the stock trading near the low end of historical ranges and carrying an dividend yield near all-time highs. Given these positive near-term and long-term investment themes we have a Buy rating on MCD.
For further information on McDonald's, or other stocks and bonds we follow, contact our offices on 25688688.
Good day and happy trading!
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