Europe
Stocks in Europe are set to finish the week on a positive note after enduring a round of heavy selling yesterday. Even though equities are in positive territory the level of enthusiasm isn’t anything special, and it feel like a lacklustre rally.
London Stock Exchange (LON:LSE) shares still benefitting from the upgrade by Berenberg yesterday. The investment bank have a price target of 4690p for the stock. There is room for consolidation in the financial markets exchange business, according to Sir Chris Hohn. The stock is near is all-time high.
Profit taking has hit shares in Randgold Resources (LON:RRS) and Fresnillo (LON:FRES) as dealers cash in on the positive run the stocks enjoyed this week. Gold and silver have hit multi-month highs recently and these mining companies were given a lift on the back of it.
GVC Holdings (LON:GVC) shares are down 2.1% at 926p, on the back of Berenberg trimming their price target for the company to 1070p, down from 1100p. The gaming group has made a provision of €200 million for a tax bill for its Greek business relating to last year.
Ocado (LON:OCDO) shares are lower again as profit taking continues. On Monday, the company stated it was doing a joint venture with Sobeys of Canada, which saw the share soars, and it has retreated since then. RBC Capital Markets reiterated their sector performer rating on the stock and have a 525p price target.
US
American stocks are on a roll as the Dow Jones, S&P 500 and Nasdaq 100 are all higher on the day. The Dow Jones clocked up another record-high, and the bullish momentum doesn’t appearing to be fading.
US GDP in the fourth-quarter of last year was 2.6%, which was well below the 3% that was anticipated. The cooling of the growth rate could mean the US central bank slows down the pace it is hiking interest rates. The Federal Reserve will meet next week, and it will be Janet Yellen’s last meeting as Chair, and she likely to go out on a steady note.
The sale of US durable goods jumped by 2.9% in December on a month-on-month basis, and that easily beat the consensus of 0.8%. Christmas shopping is likely to have played a role in that, but nonetheless it is still encouraging to see.
FX
GBP/USD is higher on the day as the US dollar remains under pressure, and the better than expected UK growth figures helped too. The downward trend in the US dollar is showing no signs of letting up, and the pound is being propped up by it. In the final quarter of 2017, the UK economy grew by 1.5%, which was a slower pace than the previous year’s growth, but it topped the 1.4% that economists were expecting. Sterling has slipped since the morning, but the upward trend is still in place so we could see new buyers enter the market.
EUR/USD is also taking advantage of the dip in the US dollar. It was a relatively quiet day in terms of news from the eurozone. French business sentiment ticked up to 113 from 112 in December. Traders are still thinking about the European Central Bank (ECB) meeting yesterday, where it was revealed that some members wanted to outline the end date for the quantitative easing programme. This slightly hawkish elements of the update are keeping the euro buoyant.
USD/CAD has taken a move lower after the disappointing growth figures from the US, and the slight cooling of Canadian of inflation drove the currency pair lower. Annualised CPI in Canada fell from 2.1% to 1.9% - meeting expectations, but the worse than expected US growth figures did the damage to the greenback.
Commodities
Gold is in positive territory again as it continues to be propped up by the soft US dollar. Yesterday, the metal printed a level not seen August 2016, and the bullish mood remains. Traders will be paying close attention to the Federal Reserve meeting next week. No change is expected to the interest rate, but the statement that follows may give us an indication of what the US central bank are thinking.
WTI and Brent Crude are up on the day as the energy markets is continuing its upward move. Oil reached a new three year high yesterday amid concerns about global supply as Saudi Arabia are contemplating about extending the production cut beyond this year.
At 6pm (UK time) Baker Hughes will reveal the active rig count report, and traders are expecting 747 - no change on the week.
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