Europe
European equity markets are still suffering from low volatility. Trading ranges have been low because investors are cautious for of geopolitical risks such as North Korea, the German election and the Catalan independence referendum. These issues are hanging over the markets and the impact is a lack of bullishness rather than out and out fear. It is as if dealers are content to remain in wait-and-see mode.
Card Factory (LON:CARDC) posted a 3.1% increase in first-half revenue, but profits dropped by 14%. Costs rose because the minimum wage was hiked, and the weakness in the pound made importing goods from the US more expensive. A special dividend of 15p was announced in the update too, but it wasn’t enough to bring in the buyers. The share price fell to a 2 month low today on the back of the announcement.
Close Brothers (LON:CBRO) has a strong set of full-year figures, but their cautious outlook overshadowed the numbers. The finance house stated the impact of Brexit on their clients and the economy is still uncertain, and that prompted investors to dump the stock. The share price gapped lower this morning, and dropped to a nine month low.
US
US equity markets, Dow, S&P 500 and Nasdaq, are stronger after being a bit lacklustre recently. In the grand scheme of things, the upward moves aren’t huge, but it is a welcome change from the sideways moves we have been seeing lately. The bull-run that the American markets have been enjoying this month could be getting their second wind.
Facebook (NASDAQ:FB) shares have bounced back today after suffering a severe sell-off yesterday. The social media giant is cooperating with the US government over the issue of alleged Russian adverts during the US Presidential election. The downward move yesterday was accompanied by a surge in trading volume, but the dust has somewhat settled today.
US consumer confidence cooled slightly according to the conference board survey .The survey for September came in at 119.8, down from 122.9, and economists were expecting a reading of 120.
On a year-on-year basis US house prices ticked up by 5.8%, according to the Case Schiller report.
FX
The EUR/USD continues to drift lower due to the outcome of the German election. Angela Merkel’s party may have secured the most seats, but it may be some time before we hear about of the possibility of a coalition government being formed. The slight political uncertainty in Germany has given traders an excuse to exit their long euro positions. We have seen a broad strengthening of the US dollar today, which is adding to the euro’s woes.
The GBP/USD is lower on the day as positive move in the greenback has put pressure on the pound. The number of mortgage approvals in the UK in the August ticked up, but traders shrugged it off. Sterling has been handing back some of the gains it made versus the US dollar recently. Despite the pullback, the upward trend the pound has been in throughout 2017 is still in place.
Commodities
Gold is weaker on the session as profiting taking from yesterday’s rally has kicked in, also, the rally in the US dollar is hindering the asset too. Gold is hovering around the $1300 mark, if it can hold onto this level it may pave the way for it to retest the September high of $1358.
Brent Crude and WTI have been hit by profit taking. The energy market has been strong lately, and dealers took the opportunity to lock in some profits.
In the early hours of trading today, Brent Crude hit its highest level since July 2015, while WTI hit a five month high. Potential disruption to oil production in Iraq, talk of major oil producers extending their production freeze, and raised projections for oil demand were all factors in the recent energy rally.
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