Europe
Eurozone stocks are broadly higher going into the close as sentiment has rebounded. Francois Villeroy of the European Central Bank (ECB) said the euro area is slowing down, but it is not in recession, and the central banker reassured the market that they are not short of tools, and this helped investment sentiment, as it shows the institution is willing to give the region assistance, if needed.
The UK travel sector reacted well to the news that Brexit has been pushed back until 31st October, as easyJet (LON:EZJ), International Consolidated Airlines Group (LON:ICAG) and Tui (LON:TUIT) are some of the biggest gainers on the FTSE 100 today. It seems that that consumers and the company’s management can act with a bit of certainty in the busy summer period.
WH Smith (LON:SMWH) announced a respectable set of first-half figures. Total revenue for the six month period increased by 8%, but on a like-for-like basis (LFL) it only ticked up by 1%. The company’s exposure to the travel sector is what sets it apart from other retailers. Total travel revenue jumped by 18%, and on a LFL basis it increased by 3%. Group pre-tax profit slipped by 1%. The interim dividend was upped by 8% and the share buyback scheme was £25 million, and that should keep investors on-side. Adding to the respectable update, was the upbeat outlook for the second-half.
Man Group (LON:EMG) declared that funds under management in the first-quarter ticked up by 3.5%. The group has completed $65 million of its $100 million share repurchase programme. The finance house also confirmed that its planned changes to its corporate structure are ‘on track’.
Ocado (LON:OCDO) shares are in the red after HSBC lowered its outlook for the company to reduce from hold, but it hiked the price target to 900p from 750p.
US
The S&P 500 is a touch higher, while the NASDAQ 100 is fractionally in the red. The minutes from the Federal Reserve last night were a little more hawkish than anticipated. Dealers were caught off guard when some central bankers expressed an interest in hiking rates, should the economy improve. John C Williams (NYSE:WMB) and James Bullard of the Federal Reserve both expressed positive comments about the US economy. Mr Williams said the economy is ‘healthy’, while Mr Bullard said the Fed policy is at the right place now.
The jobless claims rate fell to 196,000 – its lowest rate in 49 years. It is further evidence that the US jobs market is in good health. The headline PPI rate ticked up to 2.2% from 1.9%, but the core PPI rate cooled to 2.4% from 2.5%. The divergence between the two readings is likely down to the rally in the energy market throughout 2019. The dip in the core reading is concerning as it implies that demand is cooling.
Lyft (NASDAQ:LYFT) opened higher after the stock dropped to another all-time low yesterday as rival, Uber (NYSE:UBER), is preparing to publish its paperwork to list on the stock market. Lyft floated on the stock market at the upper end of the range, and now it seems to be paying the price for the lofty valuation. When Uber lists on the stock market, the two companies will be easier to compare because the accounts will be fully published, and given that Uber is the larger of the two, some traders are fearful that it will eclipse Lyft.
FX
GBP/USD had a dull reaction to the news that Brexit will be delayed until 31st October. The granting of an extension was widely expected, and a compromise was struck as the French were not in favour of year-long extension. The uncertainty still persists, it just has been given be prolonged for another six months.
EUR/USD has experienced low volatility today, and traders are still cautious of the ECB’s update yesterday, where the organisation said it was ready to support the ailing euro-area. Mario Draghi, the ECB chief, said the region’s economic indicators are likely to get worse in the near-term. Germany and France posted inflation figures of 1.4% and 1.3% respectively, both reports will were in line with expectations.
Commodities
Gold is in the red on the back of the firmer US dollar. The commodity’s inverse relationship with the US dollar continues and in light of the rebound in the greenback, we are now seeing renewed pressure on the commodity. Gold is down on the day, but if it holds above the $1,280 mark, the wider upward trend should continue.
Oil retreated from its positive run this week, which saw the commodity hit a five month high. OPEC output has fallen to a four year low, and sanctions on Iran and Venezuela have added to the upward pressure on the oil market.
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