European equity markets are broadly higher this morning after a mixed session in Asia overnight. The trade talks between the US and China were ‘constructive’ according to a Chinese government official, but as anticipated no agreement was reached. Both sides have turned the screws on each other as new tariffs were introduced by both countries yesterday.
The trading relationship is still a work in progress, and investors are cautious. Chinese stocks are still fragile and the renminbi is still weak, and this adds weight to the argument that the US has the upper hand.
A rebound in copper, platinum and palladium has helped mining stocks like Glencore (LON:GLEN), Rio Tinto (LON:RIO) and Anglo American (LON:AAL). The cooling of the Chinese economy has triggered major volatility in the metals market, as investors are worried about future demand. For the time being, the size of the tariffs being imposed on Chinese goods imported into the US are relatively small, but if it is drawn out, it could chip away at growth.
Computacenter (LON:CCC) shares are in demand after the firm posted a 24.3% jump in first-half pre-tax profits, while revenue increased by 18.1%. The interim dividend was lifted by 17.6%, and the company is confident it can achieve its year-end target. The stock has been in a strong upward trend for over one year, and if the bullish move continues, it could retest the 1,640p region.
Persimmon (LON:PSN) shares are in the red after the stockbroking firm, Canaccord, cut its price target to 2,870p from 2,950p. The lowering of the target price has dragged on Berkeley Group (LON:BKGH) and Taylor Wimpey (LON:TW) too.
EUR/USD has been helped by the pullback in the greenback, and the solid German growth numbers helped too. On a quarterly basis, the German economy grew by 0.5%, meeting economists’ expectations, and the growth level was unchanged from the first-quarter. While the euro remains below the 50-day moving average at 1.1609, its outlook is likely to remain negative.
Jerome Powell, the head of the Federal Reserve will make a speech at the Jackson Hole Symposium at 3pm (UK time). Mr Powell is likely to issue an optimistic outlook for the US economy, given the bullish Fed minutes during the week.
Foot Locker (NYSE:FL) will be in focus today as the company will release its second-quarter results.
We are expecting the Dow Jones to open up 54 points at 25,710 and we are calling the S&P 500 up 6 point at 2,862.
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