Europe
It’s been another fairly subdued day for financial markets in the wake of yesterday’s triggering of Article 50. The day has been full of headlines about the moving of jobs from London to other European capitals including Brussels, with respect to Lloyds (LON:LLOY) of London and Dublin for JP Morgan, as investors look to take stock of the likely direction of travel with respect to the next two years of potential talks between the EU and the UK.
Much will no doubt be made of the impact of the loss of these jobs to other jurisdictions, and certainly the loss of several thousand jobs will be felt, as other firms take action to mitigate any impact to their businesses, however in the broader scheme of things it is likely to be well below the over 130,000 jobs lost in the City since the financial crisis since 2008.
The weakness of the euro appears to be helping support the DAX, while the FTSE100 has trickled lower, weighed down by the pound which has pushed back above the 1.2500 level.
Amongst the best performers on the FTSE100 is plant and rental equipment hire company Ashtead (LON:AHT) after receiving a “buy” recommendation from Liberum, citing the potential for increased profitability from its US operations, with the potential for changes to US corporate taxes making it an attractive play.
On the downside Marks and Spencer (LON:MKS) is struggling after a downgrade from UBS.
US
US markets opened pretty much unchanged despite US Q4 GDP getting upgraded to 2.1% from 1.9%, boosted by an upgrade in personal consumption to 3.5%. Core PCE on a quarterly basis was nudged upwards to 1.3%, from 1.2%, still well below the Fed’s 2% target.
Weekly jobless claims also came in slightly lower from the previous week, down to 258k from 261k.
Lululemon’s share price is coming under pressure after missing on its latest numbers as well as downgrading the outlook.
FX
The euro has come under pressure after the latest CPI inflation numbers from Germany came in sharply below expectations. Coming as it has on the back of some pushing back on expectations that the ECB might be inclined to pare back stimulus, the euro has slid to a seven day low against the US dollar.
The pound has continued to hold up well despite some belligerence from EU leaders about the terms surrounding the opening of Brexit talks, as it breaks below last week’s lows against the pound.
Commodities
The loss of Libyan output due to geopolitical concerns along with a decline in Iraqi output in line with OPEC production caps has helped underpin prices in the short term, but US prices continue to remain below the psychologically important $50 a barrel level.
Gold prices are starting to slip back and away from the 200 day MA, and under $1,250 an ounce after this afternoon’s better than expected US GDP revision, saw the US dollar continue its recent rebound.
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