Europe
European markets are a mixed bag today, and the only common these across them is relatively low volatility. Some stock markets like the DAX and the IBEX have witnessed some profit taking after Friday’s strong finish, while the CAC 40 is largely unchanged.
The FTSE 100 is the dong well by comparison as the strength of the mining sector has kept the London equity benchmark in the black.
The iron ore price rallied in China overnight as inventory of steel is low and demand is picking up. The knock-on effect of the jump in iron ore is higher stock prices for companies like Rio Tinto (LON:RIO), Glencore (LON:GLEN), Anglo American (LON:AAL) and BHP Billiton (LON:BLT). Compared to other European indices, the FTSE 100 has a large component of basic resources companies.
Rio Tinto, BHP Billiton and Glencore have been rising since May, while Anglo American has been pushing higher since June. The upward move we have seen in the mining companies in recent months, fits in with the wider bounce back that has been in place early 2016.
Paddy Power Betfair (LON:PPB) shares are down 5.8% today after the company said Peter Jackson of Worldpay Group (LON:WPG)y would be replacing Breon Corcoran as CEO. The bookmaker will reveal its first-half figures tomorrow, but it stated it is performing in line with forecasts, and that it expects revenue and underlying earnings to increase by 9% and 21% respectively.
US
The Dow Jones hit another record-high as the bullish sentiment is not showing any signs of slowing down. The US equity benchmark was on a roll last week as it was racking up fresh record-highs, and the better-than-expected jobs report was the icing on the cake. Earnings season is still going on, but the most of the major names have revealed their numbers already.
At 6.25pm, Federal Reserve member Neel Kashkari is due to speak in South Dakota. Traders are expecting a dovish update from Mr Kashari seeing as he was the only Fed member to vote against the June rate hike. Despite, the solid non-farm payroll report, Mr Kashkari took to twitter to state he would like to see a move higher in inflation before voting for a rate hike. The US will announce its latest inflation report on Friday.
FX
The Halifax survey of British house prices showed an increase of 0.4% in July, and that was an improvement on June’s decline of 1%. Economists were only expecting an increase of 0.2%. The GBP/USD is a touch lower despite the positive UK numbers, but that has more to do with a broadly stronger US dollar.
The EUR/USD has gained ground today as traders buy back into the single currency after Friday’s severe sell-off. The strong jobs report from the US prompted traders to take their profits on the euro, since it had a great run leading up until the numbers. The EUR/USD is eyeing the $1.18 mark and bargain hunters move in. Dealers clearly have confidence in the single currency as it is one of the few currencies that is higher against greenback today.
Commodities
Gold is hanging around the $1255 to $1259 mark as it tries its best not to lose any more ground after Friday’s sell-off. The latest non-farm payroll report from the US, showed a decent improvement in the jobs market, and that sent gold lower. The US dollar is firmer too in light of the data, and this is adding to gold’s woes. Traders are still not too worried about the prospect of an interest rate hike from the Federal Reserve this year, but an improving jobs market will add to the hawk’s argument.
Brent Crude and WTI have fallen today as major oil producers are holding a two day meeting, which starts today, in Abu Dhabi. The aim of the meeting is to get oil producing nations to comply with the production freeze that was agreed upon. In May, OPEC extended the production cut by nine months, so it would run until the end of March 2018, but there was poor adherence to the production cut, and the price fell heavily. Now, members of OPEC want to make sure the promise to cap production is kept. The problem is, OPEC members have a history of suiting themselves rather than focusing on what is best for the group.
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