Europe
European stock market performance today has once again been characterised by the outperformance of the FTSE100, while its European peers have traded in a much more mixed fashion.
Another weak day for the pound has contrived to keep pushing the FTSE100 upwards towards another record high and above the 7,300 level and on course for a 12th consecutive record close, while the FTSE250 has lagged behind as it strives to gain a foothold above the 18,400 level.
Markets appear to have decided to focus on the widening of the trade deficit in November rather than the improvement in the industrial and manufacturing production numbers in pushing the pound below the 1.21 level against the US dollar for the first time since October last year when the flash crash pushed the pound briefly below the 1.2000 level.
Supermarkets have once again enjoyed a boost after Sainsbury’s followed on from Morrison’s yesterday by reporting that it enjoyed a record week of sales over the Christmas period. Combined total sales rose 1% helped in no small part by its recent Argos acquisition where the business saw a 4.1% rise in sales of toys and electrical. The diversification into clothing also helped its overall business as its TU range saw a rise of 10% in sales volumes.
In a further indication of buoyant consumer confidence Cineworld reported record ticket sales helped by blockbusters like Star Wars spin-off Rogue One and the Jungle Book, as the company reported higher revenues on ticket sales as well as food and drink.
On the downside TUI Travel has dived sharply after being downgraded by Credit Suisse (SIX:CSGN) while mining stocks have been a bit of a mixed bag with Anglo American (LON:AAL) outperforming while gold and silver miner Fresnillo (LON:FRES) has slipped back.
House builder Taylor Wimpey (LON:TW) has also slipped back despite reporting that full year profit would be at the upper end of expectations.
German car maker Volkswagen (DE:VOWG_p) shares have risen despite confirming that it was well on the way to agreeing a settlement package with the US Department of Justice over the emissions scandal. The package is estimated to be in the region of $4.3bn and the company would plead guilty to criminal misconduct. The settlement agreement could well mean that the company might have to set aside further provisions over and above those already set aside, and there is also the prospect that an admission of criminal liability could leave them open to future independent class action lawsuits.
US
US markets have opened with their eyes focussed on this afternoon’s press conference from President elect Donald Trump, and while the markets will inevitably want to focus on his fiscal plans the focus is likely to be more on the overnight allegations that the Russians have evidence of impropriety on his part.
In earnings news US auto maker Ford announced that it expected to be less profitable in 2017 than it would be in 2016.
It was also being reported that aircraft maker Boeing (NYSE:BA) would be looking at laying off some engineers over the course of the next few months.
FX
The US dollar has once again outperformed ahead of todays scheduled press conference from President elect Donald Trump, with the pound being one of multiple casualties as markets ignored another set of fairly decent economic data from the manufacturing sector, though for now it is holding above the 1.2080 level.
With Bank of England governor Mark Carney facing the Treasury Select Committee he rowed back a touch on the overall effects of Brexit by admitting it wasn’t the biggest risk facing the UK economy in 2017.
He also said he did not necessarily agree with last week’s mea culpa from his colleague Bank of England chief economist Andrew Haldane about the Bank of England’s misreading of the short term economic outlook last week.
Given the current weakness in the pound there must be concern about rising inflation expectations given that the current 5 year 5 year estimates for inflation is at its highest level since mid-2013 at 3.65%. The latest NIESR estimate of UK GDP also painted a positive picture of the UK economy at 0.5% however this hasn’t been enough to stop the pound slipping back to its lowest levels against the US dollar since October, below 1.2100.
The euro has also come under pressure, along with the Japanese yen and Swiss franc.
Commodities
Crude oil prices have experienced a little bit of a rebound in reports that Saudi Arabia may look to cut crude sales to China and other Asian nations, as it looks to underpin prices and cutting back on output. This is despite the EIA raising its estimates for US crude output for 2017 to 9m barrels a day.
The latest API crude oil inventory data showed a rise of 1.3m barrels overnight.
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