Europe
German politics appear to be heading in the right direction as the Social Democrats are open to the idea of entering into a grand coalition Angela Merkel’s Christian Democratic Union. The two parties are due to meet on Thursday, and dealers are optimistic about the meeting. Germany has been without a functioning government since late September, but purchasing manager’s index (PMI) and the IFO business climate report proved the economy is going strong despite the political uncertainty.
There are additional signs the Chinese economy is slowing down as the survey of sales managers and steel manufactures showed they were a bit on the cautious side. The second-largest economy in the world is making a gradual slowdown in economic growth, and it could mean weaker demand for minerals. Stocks like Anglo American (LON:AAL), Antofagasta (LON:ANTO) and Vedanta Resources (LON:VED) are in the red.
Shares in Ocado (LON:OCDO) are up 7.2% after Credit Suisse (SIX:CSGN) stated the decline in the shares over the past few weeks has been overdone. The share price hit five month low this morning, but the stock rallied since. If the share price manages to clear the 200-day moving average at 278p, it could target the 310p area.
Aviva (LON:AV) is tipped to announce a £1 billion share buyback scheme, and the stock is up 0.86% on the back of it.
US
The Dow Jones, S&P 500 and Nasdaq 100 are all set fresh record highs as the bullish run continues. Retailers will be in focus as today is Cyber Monday, which follows Black Friday at the back end of last week. Investors will be keen to find out the actual profit margin retailers are making, because in many cases, the deep discounts are fuelling the consumer behaviour. From now until the end of the year the retail industry will be in play as this marks the beginning of the shopping season.
US new home sales in October jumped to 685,000, from 6670,000 in September, and analysts were expecting a reading of 625,000. Today’s reading was the highest level since November 2007. This underlines how strong the US economy is. The US housing market has been helped along by the relatively low interest rate environment. Rates in the US are expected to be hiked next month, but an increase of 0.25% is unlikely to derail the powerful American housing market.
FX
GBP/USD is higher on the day as the general weakness in the greenback have assisted the pound. Andy Haldane, of the Bank of England (BoE), stated the UK central bank took its ‘foot off the accelerator’ this month. Mr Haldane is known to hold hawkish views so it hardly surprising the dovish hike by the BoE earlier this month didn’t match his views.
EUR/USD is a touch weaker today as the single currency came under some pressure on the back of the stronger than expected new home sales from the US. Earlier today the euro hit as two month high against the US dollar so a bit of profiting in the wake of the strong US housing data was to be expected.
Commodities
Gold came within a whisper of the $1300 mark as the weakness in the US dollar helped the metal. Gold has been creeping higher for the past month, but it has been a slow and steady rise, if the market clears $1306 it could it signal the end of the relatively range bound trading it has endured lately.
WTI and Brent Crude are in the red today after having a positive run recently ahead of the OPEC meeting on Thursday. There is speculation that major oil producers will extend the oil production cut until the end of 2018. Some dealers feel a lot of that is already priced in and are exiting their long positions ahead of the meeting in Vienna.
The US shale producers will be paying close attention to OPEC’s decision, as a surge in the energy market could prompt higher production in the shale sector – which could counteract OPEC’s decision.
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