Europe
European equity markets are largely in positive territory going into the close today, but weak volatility has led to narrow trading ranges. The positive moves that stock markets have made in the recent weeks are being slowly built upon, but optimism isn’t particularly high.
Shares in Ryanair (LON:RYA) are down 3.4% after the airline stated yesterday that another batch of flights will be cancelled. Flights have been scrapped on some routes as far out as spring 2018. The cost of cancelling flights is relatively small in comparison with their annual profits. What is harder to quantify is how much damage is being done to their reputation through loss of future revenue. The fiasco with the pilot’s holiday schedule is calling their reliability into question, and we could see their full-year outlook being revised lower in the near-term. Ryanair shares are holding up well for what is going on at the moment, but traders are cautious because the full extent of the reputation damage has yet to be revealed.
Ashtead (LON:AHT) and CRH (LON:CRH) are doing well today on the back of Donald Trump’s tax proposals. Both companies have large operations in the US, and if the American economy is going to be potentially experience higher economic growth on the back of the pro-business tax reforms, the firms could rake in higher profits.
Carnival (LON:CCL) shares fell to a five month low as investors are still swerving the stock on account of some of its cruises being impacted by the hurricanes in North America. On Tuesday, the company stated it expects fourth-quarter earnings to be hit by 10% to 12% because of the adverse weather. The rest of the update was robust as revenues and earnings topped estimates, but investors remain nervous because Harvey and Irma may deter future bookings.
US
US equity benchmarks are a touch lower amid low volatility. The proposal by Donald Trump to introduce a more pro-business tax system is the talk of the markets at the moment.
Paul Ryan, the speaker of the House of Representatives believes the tax reforms can be implemented this year. The approach to the tax changes is different from that of the failed attempt to alter health care. This gives investors hope the tax proposals will be implemented.
In the second-quarter, the US economy grew by 3.1% and that compared with the previous reading of 3%. The core personal consumption expenditure (PCE) for the second-quarter came in at 0.9%, in line with expectations, but the first-quarter reading was revised to 1.8% from 2%. This indicator is closely watched by the Federal Reserve, and downward revision to the previous report could lead to a more dovish stance from the US central Bank.
FX
The EUR/USD is continuing its bounce back and the single currency suffered heavy losses over the past two weeks. The move can be partially attributed to the profit taking in the US dollar. The final reading of US second-quarter growth came in at 3.1%, topping the estimate of 3%, but it had little impact on the greenback. German CPI remained at 1.8%, meeting economists’ expectations, which helped steady the euro.
The GBP/USD is also higher today an account of the slide in the greenback. There were no major economic announcements from the UK today, but we did hear from Mark Carney, the head of the Bank of England. Mr Carney, stated the UK economic performance over the next few years will depend on the Brexit deal. The central banker also stated the BoE can’t stop weak growth in real incomes.
Commodities
Gold is fractionally higher today after briefly hitting a one month low this morning. The metal has been in a downtrend trend for nearly three weeks, and the recent risk-on attitude from traders is playing a part in the negative move. The turnaround in the US dollar today has assisted gold in the past few hours.
WTI and Brent Crude are resuming their upward trend today. The energy market has been bullish lately with Brent hitting a 26 month high this week, and WTI hitting it highest mark in nearly 5 months today.
The gap between the two oil contracts is narrowing as WTI plays catch up, thanks to more American refineries in operation in the wake of the two hurricanes.
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