European stocks are firmly in the red as investors are spooked by a range of issues from Italy, the US-China trade spat and uncertainty surrounding Saudi Arabia.
The Italian government are keen to defy Brussels and widen their budget deficit in a bid to boost economic activity, and the bold move could put pressure on their government bond market. A Chinese official announced that Beijing does not want a trade war with the US, but it does not fear one, and that suggests the Chinese government are not willing to flinch. President Erdogan of Turkey said he will reveal the ‘naked truth’ about Jamal Khashoggi’s death shortly, and that could spark a diplomatic crisis in the region.
Anglo American (LON:AAL) confirmed that third-quarter total production increased by 1%. Copper production jumped by 17%, but when you factor in the stoppages at Minas Rio mine, copper production fell by 3%. The group stated that diamond production and iron ore production dropped by 9% respectively. The mixed production figures were accompanied by an equally mixed outlook as platinum production guidance was raised, diamond output was kept unchanged and palladium production guidance was lowered. The stock has been drifting lower since June, and while it remains blow 1,700p – 200-day moving average, it should remain negative.
Whitbread (LON:WTB) announced a no-frills hotel chain as a way of diversifying their portfolio. The Zip hotel chain will be a low-cost alternative to Premier Inn, as rooms per night will start from £19, while Premier Inn rooms start from £49. Zip rooms will be a lot smaller and customers will have to pay for extra for services such as room cleaning and breakfast. Zip hotels will be located on the outskirts of major cities in a bid to keep costs down. The rise of Airbnb, has shaken up the accommodation market and now Zip will provide additional choice for customers. The stock has been broadly pushing higher for over two years, and if the bullish move continues it might target 5,000p.
St. James’s Place (LON:SJP) announced that assets under management (AuM) topped £100 billion – a record level. .It is encouraging to see the company is continuing to attract fresh funds in the face of uncertainty in the financial markets. Net inflows and investment gains grew in the previous nine months, and the company is confident it can achieve its medium-term goals. The share price has been in decline since January, and if it holds below 1,000p it might target 900p.
EUR/USD has been helped by the robust Germany PPI report which jumped to 3.2%, up from 3.1%.It suggests that demand is firm, and that could equate to higher CPI in the months to come as producers might pass on their costs. GBP/USD has recovered some of yesterday’s losses but uncertainty surrounding Brexit persists, and Prime Minister May’s apparent weakness is hurting sterling too. The CBI industrial order expectations report will be released at 11am (UK time).
Caterpillar (NYSE:CAT) will release their third-quarter results today. The company is seen as a good barometer for US and global demand. The heavy machinery manufacturer supplies construction and mining industries with equipment, and their order book gives a good gauge of how well the world economy is performing.
We are expecting the Dow Jones to open 327 points lower at 24,990 and we are calling the S&P 500 down 39 points at 2,716.
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