UK and Europe
European markets traded moderately lower on Friday, led by travel and leisure stocks in the wake of the horrific attack last night during Bastille celebrations in Nice, France.
Moderate losses on the FTSE 100 were dominated by travel firms like Easyjet (LON:EZJ), TUI (LON:TUIT) and Carnival (LON:CCL). Gold miners Fresnillo (LON:FRES) and Randgold (LON:RRS) were top fallers after a muted reaction in the price of gold to the atrocity in Nice. Homebuilder and bank shares have bounced back after shock decision to hold rates from the Bank of England.
The market’s kneejerk reaction to sell travel and leisure stocks in the wake of a terrorist event is unfortunately becoming something all-too-familiar. Recent experience suggests the initial sell-off will be short-lived but the potential damage to traveller confidence is a clear negative for affected firms. This is especially true in France where there is already concern that the drop in sterling will impact tourism from the UK.
A cautious outlook from Firstgroup (LON:FGP) added to woes for the travel sector. The transport operator suggested the benefits of the lower pound from dollar-based business will be offset by domestic uncertainty after the referendum.
Johnson Matthey (LON:JMAT) was top riser after it poached Anna Manz as a new finance director from Diageo (LON:DGE).
US
US stocks opened moderately higher on Friday, avoiding the decline seen in Europe after a much bigger than expected rise in retail sales for June eased concerns of a slowdown in the US economy. The Dow Jones Industrial Average sat near record highs in early trading whilst the S&P targeted its sixth consecutive daily rise.
Shares of Citigroup (NYSE:C) rose after it beat earnings estimates whilst Wells Fargo (NYSE:WFC) shares dropped after its earnings came in line.
Herbalife (NYSE:HLF) shares surged 20% following harsh criticism from the FTC that fell short of calling the company pyramid scheme.
FX
Stronger than expected retail sales and industrial production data tipped the US dollar into broad-based strength, though gains were capped by a slight moderation in inflation and consumer sentiment.
Without a specific catalyst for strength on Friday, the British pound saw some profit-taking after its biggest weekly gain since 2009. Sterling gave up early gains after the Bank of England’s Chief Economist Andy Haldane spoke out in favour of heavy-hitting stimulus. Mr Haldane suggested he would “rather run the risk of taking a sledgehammer to crack a nut than taking a miniature rock hammer to tunnel my way out of prison.”
Commodities
The price of crude oil reversed early losses after Exxon (NYSE:XOM) stopped its shipments from a Nigerian port after technical disruptions likely caused by local militants. The gain in crude prices was supported by higher demand implied by stronger Chinese growth data.
Gold prices slipped again on Friday as the dollar gained strength following stronger US economic data. Today’s decline marks the end of a sharp weekly decline for the precious metal which has eclipsed the entire rise from the previous week, a bearish technical signal.
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