Europe
The FTSE 100 is the standout performer in Europe today and the bullish move is being underpinned by the energy sector. Royal Dutch Shell (LON:RDSa) has announced its plans to return to paying an all-cash dividend. The oil titan is still planning on paying down debt, but the scrapping of the scrip dividend is a sign of how strong their cash-flow position is. Traders are viewing the move as a sign the major oil company is returning to bullish days of before the downturn in the oil market.
The Bank of England (BoE) stated that all the major UK banks passed their stress test. This is a sign of confidence in the British banking sector as it would be able of withstand a severe downturn in the financial climate. RBS (LON:RBS) and Barclays (LON:BARC) failed to pass the BoE’s ‘systemic’ hurdle, but neither bank was required to raise additional capital. Lloyds' (LON:LLOY) shares fell after BNP Paribas (PA:BNPP) questioned their ability to keep up with current dividend policy, and the share price is down 1.2%.
Ocado (LON:OCDO) announced a partnership with Groupe Casino – a company that has an 11% share in the French grocery retail sector. Investors were very patient with Ocado,as the company was talking about putting into place an overseas partnership ,and now it has finally lived up to its promise. Shares in Ocado are up 19.9% today.
US
The US indices are still enjoying their bullish run as the Dow Jones, S&P 500 and Nasdaq 100 all notched up new record highs. In the wake of the Black Friday and Cyber Monday, retailers like Amazon (NASDAQ:AMZN) are still holding up well.
The US posted solid economic indicators today, highlighting how robust the US economy is. The Case-Schiller house price index (HPI) for September showed a 6.2% increase on annual basis, and that topped the 6% rise the market was anticipating. The Conference Board consumer confidence report for November jumped to 129.5, up from 126.2 last month.
Jerome Powell, how has been nominated to be the head of the Federal Reserve, is currently testifying in front of the Senate banking committee. Mr Powell has never dissented from when it comes to voting to interest rate policy, so traders are not expecting any major shift in policy from him.
FX
GBP/USD is softer on the session after Mark Carney, of head of the BoE, stated the UK banking sector would deal with a ‘dis-orderly’ Brexit, but other aspects of the economy could feel ‘pain’. Ultimately the solid stress test results are the main points to take from today’s update, but that admission that a ‘sharp’ exit from the EU may damage some aspects of the economy gave traders an excuse to close out their long sterling positions.
EUR/USD is in the red ad the US dollar has bounced back from its negative run lately. Yesterday the US dollar index fell to its lowest level since late September, and it has been pushing higher since. The stronger than expected US housing price data and Conference Board consumer confidence report added to the bullish move in the US dollar.
Commodities
Gold is still in its slow and steady grind higher, and the metal continues to edge up even though the US dollar is higher today. The gold market has been range-bound over the past few weeks and it hasn’t been swayed what has been going on in other markets. It looks likely that gold will continue to remain in a relatively low trading range.
WTI and Brent Crude have drifted lower throughout the day as traders are getting nervous about the announcement that is due from OPEC on Thursday. The market is expecting an extension to the co-ordinated production cut, and it could be put back as far as the end of 2018.
Russia along with OPEC has agreed to curb out until the end of March 2018, but now there is talk that Russia won’t agree to extension beyond March next year.
DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.