UK and Europe
Shares in Europe pulled back on Friday as the US dollar regained its footing following this week’s decision by the Federal Reserve not to hike interest rates. The FTSE 100 teetered around 6900 whilst the British pound gave up 1.30 to the US dollar.
Data showing 20-month lows in Eurozone manufacturing and services prompted investors to book profits after big Fed-induced gains. The economic picture out of Europe is looking even more confused. France’s economy grew slower than first reported in the second quarter but its service sector expanded significantly in September, suggesting a rebound in Q3. Germany’s service sector however, slowed by the most in more than three years in September according to preliminary PMI data from Markit.
Shares of Sports Direct (LON:SPD) leaped over 7% on news that founder and largest shareholder Mike Ashley is taking over as CEO from Dave Forsey. The corporate governance issues at Sports Direct have been addressed with a change at the top. With Chairman Keith Hellawell staying on, Dave Forsey has had to take the fall for the scandal surrounding warehouse working practices. Mike Ashley has been criticised in some quarters for having too much influence, but really the opposite seems true. Listening to his media interviews, it seems more like Mr Ashley took his eye of the ball. By taking over as CEO, Mike Ashley is making a public commitment to refocusing and getting the company he founded back on track.
US
Stocks in the US opened lower, matching the weaker sentiment in Europe and Asia as PMI data showed slower growth in the US manufacturing sector.
Shares of Twitter (NYSE:TWTR) flew over 20% higher on reports there is serious bid interest and that a sale would be the preference of management. Reported suitors include Google (NASDAQ:GOOGL) and Salesforce (NYSE:CRM) and a sales price of $22.50 has been touted. Analysis of Twitter always sounds like a naughty pupil’s school report, “lots of unfulfilled potential.” With ex CEO Dick Costello lacking ideas and founder Jack Dorsey split between Twitter and his other company Square (NYSE:SQ), the social network has lost its way. The hope for investors would be that under the wing of a big company, it could expand its user base and better monetise those users.
Shares of Yahoo! (NASDAQ:YHOO) fell slightly to $43 following confirmation from the company that it has suffered the biggest data breach in corporate history. The belief is that Verizon (NYSE:VZ) will go ahead with its Yahoo acquisition despite the hack, but clearly the deal getting completed is now more in doubt. That could easily change if it is determined customers have lost more sensitive data such as credit card details, which at the moment Yahoo has said is not the case. There have been some over-reactions to data breaches so investors are showing some more restraint.
Shares of Marriot International (NASDAQ:MAR) dipped on Friday morning after it closed its deal to buy Starwood (NYSE:HOT) hotels for $13bn.
FX
The British pound was the biggest FX faller on Friday after UK foreign secretary Boris Johnson rekindled Brexit fears. Boris told Sky News in an interview on Thursday that there was an expectation of Article 50 being triggered early next year and that the negotiations could be completed within two years. That Boris Johnson holds these opinions is not new, and Downing Street immediately played them down in a statement anyway. GBP/USD dropped to a fresh weekly low but rebounded before reaching 1.29 whilst EUR/GBP broke above 0.865, a one-month high.
Weak Canada inflation and retail sales data sent the Canadian dollar lower. The Canadian economy continues to reel from the effects of the low oil price on its dominant energy industry. USD/CAD remains in its 1.27-1.33 trading range that began in May.
The New Zealand dollar remained under pressure following this week’s decision to hold rates steady with a bias towards cutting interest rates again.
Commodities
It was another day of headline-driven volatility in the crude oil market. Reports suggesting Saudi Arabia made a proposition to cut its output if Iran froze its output at current levels sent crude prices soaring. Brent crude topped $48 per barrel before giving back some of the gains on scepticism that a) the reports are true and b) that Iran would actually accept if they were.
The price of gold rebounded from its late yesterday and morning losses to briefly recover $1340 per oz.
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