Europe
Equity markets in Europe are in positive territory, and the FTSE 100 is out performing its continental counterparts. Stock markets in Europe haven’t experienced much volatility today after we witnessed large moves yesterday. Also, investors are looking ahead to the European Central Bank meeting tomorrow, and even though we are not expecting a change in policy, the central bank is expected to adopt a less loose monetary policy in the coming months.
BHP Billiton (LON:BLT) is up 0.6% after it announced a mixed production update today. Iron ore output increased but coal, copper and petroleum declined. Even though the update was far from perfect, the miner stated it was on track to achieve its full-year financial targets.
Shares in Reckitt Benckiser (LON:RB) are 1.3% higher after the company announced plans to sell its US food business for $4.2 billion. The fund generated from the deal will be used to reduce the company’s debt. Trimming your outstanding loans is a sensible way to ensure you don’t operate outside your means.
US
The Dow Jones and the S&P 500 have posted small gains today as trading ranges remain narrow.
Morgan Stanley (NYSE:MS) shares are up 2.9% after the US bank posted an 11% jump in second-quarter profits. The earnings per share topped estimates. Most areas of the bank are doing well. Equity trading, corporate advisory and securities underwriting had a good quarter. Bond trading revenue declined by 4%, which is actually too bad when you consider Goldman Sachs (NYSE:GS) and Bank of American registered declines of 40% and 19% respectively in that department.
US housing starts in June came in at 1.21 million, and trades were expecting 1.15 million, and the May number was 1.09 million. Building permits in June were 1.25 million, up from the 1.16 million in May and that topped the expectation of 1.2 million. The numbers show that the US housing market is ticking along nicely. There is growing perception that interest rates may not be increased again this year, and if that is the case, it could spell good news for the housing market.
FX
The EUR/USD has been hit by profit taking as traders lock in their profits after the single currency’s recent stellar run against the US dollar. It has been a quiet day in terms of economic announcements but traders are still mindful that Donald Trump couldn’t get his way on healthcare reform, and that could be a sign of more to come from the Republican Party. The euro has been gaining ground against the US dollar since the start of the year and its outlook remains positive. Tomorrow, traders will be paying close attention to the European Central Bank meeting.
The GBP/USD has been trading within a tight range after a very volatile day yesterday. The lower than expected inflation figure from the UK has tempered the bullish sentiment surrounding sterling for now. All things considered the pound is still looking favourable since it is still holding above the $1.30 level, it just means the hawks at the Bank of England might be silenced for a while.
Commodities
Gold has gained ground this afternoon as the bullish sentiment continues. The metal has been in demand recently as uncertainty in the equity markets has made the safe haven asset more desirable. Adding to gold’s attractiveness has been the sell-off in the US dollar in recent weeks. The metal has moved upward over the past seven months, and the turnaround in the market this month could well be the beginning of the next move higher.
WTI and Brent Crude oil surged higher after the oil inventory report showed a larger than expected decline. The energy information agency (EIA) revealed that US stockpiles of oil fell by 4.72 million barrels, and the consensus was for a 3.5 million barrel decline. Last week there was drop of 7.56 million barrels. Traders would be unwise to overlook the fact that US oil production increased by 32 thousand barrels per day.
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