Stock markets in Europe are mixed this morning as global trade as well as Brexit talks continue to dominate the headlines. Yesterday, there were mixed messages from the US-China trade situation as traders didn’t know which side to believe in relation to the discussions that took place last week. This morning, Beijing confirmed the US statement on a partial trade deal is accurate, which has restored some confidence in the process. Speaking of drawn out talks, dealers continue to follow the Brexit discussions. The British side will put forward a new plan later this week, while Brussels are open to new suggestions, so traders are cautiously optimistic.
Renishaw (LON:RSW) shares took a knock this morning after the group posted an 86% fall in first-quarter adjusted profit before tax. Revenue in the period declined by more than 19% as a number of orders from businesses in Asia were not repeated. The group cited a slowdown in global manufacturing for the poor performance. Given global trade tensions, the sector is likely to remain under pressure. On the bright side, Renishaw’s balance sheet is ‘strong’, so that should reassure traders to a certain extent.
The Financial Times have published the accounting practices of Wirecard – which has clobbered the share price. Questions have been hanging over the company’s accounting practices, as there is chatter about the possibility that dubious transactions took place. When it comes to accounting standards, traders don’t take any chances because if you can’t trust the published figures, then investor confidence is likely to remain weak.
GBP/USD is higher as the Brexit saga continues. It was reported the UK will put forward a new proposal this week, in addition to that, the EU’s chief negotiator, Michel Barnier, said that a deal is still possible this week. The pound will continue to be dragged around by the politics.
The UK unemployment rate ticked up to 3.9% from 3.8%. Average earnings excluding bonuses were 3.8%, which topped the 3.7% forecast, plus the July reading was revised higher to 3.9% from 3.8%. Overall, it was a decent jobs report as the jobless rate at a multi-decade low, plus wages are firm.
EUR/USD is largely flat as volatility in the greenback is low. The final reading of French CPI for September was unchanged at 1.1%. The German ZEW economic sentiment reading was -22.8, while the consensus estimate was -27.
JP Morgan will be in focus as the bank will release its third-quarter figures. The Wall Street titan posted $9.7 billion profit in the second-quarter - which was a record. It is worth noting the US economy was growing faster then. In recent months, the Federal Reserve have cut interest rates, which has flattened the yield curve. Banks tend to have higher lending margins in higher interest rate environments, so a more tempered outlook could be in the offing.
We are expecting the Dow Jones to open 93 points higher at 26,880 and we are calling the S&P 500 up 12 points at 2,978.
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