Europe
Shares in Pendragon (LON:PDG) plunged by 18% today after the company stated that full-year pre-tax profits would be £60 million, and that is a significant decline on its previous guidance of £75 million. The company announced that weak consumer demand has led to a drop in the number of people looking to purchase new cars. Pendragon anticipates the weakness in the new car market to remain until mid-2018. Shares in Pendragon have been in decline since January 2016, and the gap lower adds to the negative sentiment.
GKN (LON:GKN) is up on the day over a report the engineering company contemplating splitting in two. A few weeks ago the firm shocked the market by revealing it would incurs costs of £40 million, for two charges. The talk of the split in the company has helped the recoup some of the lost ground.
The IBEX 35 continues to be the weakest market in Europe as the uncertainty over Catalonia is still ongoing. The Madrid administration will be pressing ahead with its plans to impose direct rule, the Senate will vote on it on Thursday. The Spanish market has been in decline since May and the chaos surrounding the Catalan question will deter buying.
The FTSE MIB is in positive territory despite Lombardy and Veneto voting for more autonomy over the weekend. The referenda were non-binding, but the message is clear that there is a deep division in Italian politics. The will pose a problem from Rome and Brussels as voters are clearly not happy with the status quo.
US
It’s the same old story on Wall Street, as the major indices rack-up another set of record highs. Investors are hopefully the tax reforms the President is proposing will get passed. Mr Trump is very pro-business, and it is believed the changes to the tax system would be very beneficial to the economy.
American indices are still enjoying a very bullish run, and since the volatility index (VIX) is subdued, we can expect the positive sentiment to continue.
Halliburton (NYSE:HAL) shares are slightly lower on the day even though the company posted third-quarter earnings per share (EPS) of 42 cents, and analysts were expecting 37 cents. Revenues at the North American division jumped by over 90%, and it was helped along by fracking.
FX
GBP/USD briefly crept above the $1.32 mark as the trader’s book their profits on the rally in the US dollar. In October, the UK confederation of British industry (CBI) industrial trends orders expectations dropped to -2 from 7 in September, while traders were expecting a reading of 9. The pound dipped after he report was revealed, but then did a U-turn as dealers exited their long positions in the greenback.
EUR/USD has been hit by the broad rally in the US dollar and the political uncertainty in Spain and Italy isn’t helping the euro either. Traders are optimistic that Donald Trump’s tax reforms will be introduced, and that has given a boost to the US dollar. The latest consumer confidence report for the eurozone came in at -1, while dealers were expecting a reading of -1.1.
Commodities
Gold is weaker today as the rally in the US dollar and the general bullishness in the global equities has deterred traders from buying the metal. Gold has been in decline since mid-September and it has now dipped below its 100-day moving average at $1275, and if it remains below that metric it could remain under pressure. The high hopes traders have for Trump’s tax plan is crippling gold’s prospects as it is likely to keep the Fed in a cycle of hiking.
WTI and Brent Crude oil are weaker today and the volatility is relatively low. Concerns about supply still persist as fighting between pro-independence Kurds and Iraqi forces on are still ongoing. Iraq is a major oil producer, and the oil-rich north is seeking to separate from the rest of the country, and this is fuelling fears over supply.
Last week, the number of active oil rigs in the US declined by 7 to 736, it was the third consecutive weekly decline.
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