Europe
With the exception of the FTSE 100 European equity markets have had a positive session. Optimism in the eurozone is high as Germany revealed a very strong reading on IFO business confidence survey. This report came one day after Germany and France posted impressive services and manufacturing figures. The strength of the single currency hasn’t hurt the Continental stock exchanges.
The Social Democrats in Germany are to meet with Angela Merkel’s Christian Democratic Union (CDU) on Thursday to discuss the possibility of forming a government. The Social Democrats haven’t fared well in the past for deals with the CDU, so there is no guarantee a deal will be struck, but the potential for a positive political outcome is boosting Germany stocks.
Ao World (LON:AO) shares are up 5.7% as Black Friday sales boosting the online retailer. Earlier this week the company posted a 12% rise in first-half revenue, but due to an aggressive marketing campaign it swung to a loss. Today kicks off busy shopping season and traders will have high hopes for the company is it did the groundwork in regard to advertising to promote the brand ahead of Christmas. The share price has been in decline throughout 2017 but bounced back in early November, and if the turnaround continues it could target 154p.
US
The S&P 500 and Nasdaq 100 has registered fresh record highs as Macy’s (NYSE:M), Kohl’s (NYSE:KSS) and Amazon (NASDAQ:AMZN) are in high demand as the Black Friday fever sets in. The major shopping day in the US has given a boost to the retail sector.
The US market is operating a half day today as yesterday was Thanksgiving, and trading volumes are thin and volatility is low. Next week the American stock market should be back to full swing, and Cyber Monday will kick off the week.
US policy marker will be back to business next week also, and investors will want to see some developments in the tax reform. The prospect of a lower corporate tax rate is adding to the bullish sentiment surrounding US stocks.
FX
EUR/USD hit is highest level in over one month and the German IFO business confidence survey assisted the move. The reading came in at 117.5 – it’s highest since reunification, and this underlines the mood in the largest economy in the eurozone. The euro has been gaining ground versus the US dollar throughout November, and it could pave the way to retest the 2017 high of $1.2092.
GBP/USD continues to creep higher as the general weakness in the US dollar is helping the pound. The greenback has been losing ground lately as the tax reforms proposed by President Trump are still in the negotiation phase. Also, the future direction of the Federal Reserve is unknown as there are several vacancies on the horizon. The pound has been pushing higher against the US dollar since March and while it is comfortable above the $1.30 mark it is likely to continue.
Commodities
Gold is still experiencing low volatility and is trading in a tight range. The metal has been grinding higher for the past month but there has been a distinct lack of enthusiasm to the upside. The softness in the US dollar in recent weeks has kept gold up. Dealers are heavily pricing in an interest rate hike from the Federal Reserve next month, but beyond that the outlook isn’t as clear as the make-up of the US central bank will look very different in 2018.
WTI and Brent Oil are slightly higher today as OPEC and Russia appear to be in agreement extend the oil production cut until the end of 2018. The final details need to be worked out, and the major oil producers are meeting in Vienna next week.
OPEC and non-OPEC members have a habit of saying one thing and doing another when it comes to production but traders are taking any chances ahead of meeting next week.
WTI hit a new 29 month high due to the partial closure of Keystone pipeline that connects oilfields in Canada and the US.
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