Europe
European stock markets were fairly static on Tuesday with low volumes producing low volatility as investors paid tribute to fallen heroes on Remembrance Day in the UK and Veterans Day in the US.
Volatility is expected to pick up in the UK tomorrow heading into the Bank of England’s quarterly inflation report preceded by UK unemployment and wage data while the important European data will be seen in Friday from the latest Eurozone GDP figures including Germany’s.
Sports Direct Intl Plc (LONDON:SPD) shares fell heavily on news the company will open a discount £5 a month gym chain. There is already a market for discount gyms with many local alternatives, probably the biggest chain is PureGym who charge more like £15 per month, the Sports Direct gyms would be one third of the price. For £5 per month it’s hard to imagine what facilities the gym might offer, perhaps just an empty space with soft mats could cater for those with small living rooms.
Telecoms giant Vodafone Group PLC (LONDON:VOD) scored impressive earnings in the third quarter putting it at the top of the FTSE 100 as Dixons Carphone (LONDON:DC)and Germany’s Deutsche Telekom AG Na (XETRA:DTEGn) rallied in sympathy.
Land Securities Group Plc (LONDON:LAND) was a top rider after the commercial property company said its adjusted NAV rose in the first half.
The commodity sphere made up the bulk of the losses at the tail end of the FTSE with Tullow Oil Plc (LONDON:TLW) and Anglo American (LONDON:AAL) seeing some the biggest drops while airlines Easyjet (LONDON:EZJ) and International Airlines Group (LONDON:ICAG) flew higher.
The UK has been performing well and UK corporate earnings are on the whole growing but the direction of the FTSE 100 is being influenced by the large swings in commodity prices and resultant moves in mining and oil shares.
US
US markets opened at the highs but dropped back in early trading potentially ending a four-day streak of new all-time highs for the S&P 500.
Alibaba Group Holdings Ltd (NYSE:BABA) shares lost out after founder Jack Ma said the finance services arm will definitely go public but probably in mainland China. Investors had bought into Alibaba shares in anticipation of strong “Singles Day” sales and took profits after the announcement the company beat its own record with $8bn in sales in one day.
FX
There wasn’t too much movement in the US dollar today.
EUR/CHF is becoming a point of focus in the FX markets, not for its volatility but as the pair trades closer to 1.20; the determination of the Swiss National bank to maintain its peg will be tested.
The euro is being deliberately devalued by the European Central Bank’s asset purchases and with lots of geopolitical risk in markets; the Swiss franc would typically be in demand. To fight market forces the SNB must intervene and buy euros which are losing value against most other major currencies.
Commodities
The weaker than expected payrolls last Friday had a fairly neutral effect on stocks but the US dollar sold off heavily while commodities caught a bounce. By the end of trading yesterday oil and gold were trading back down close to the lows.
The bounce in Crude Oil prices only made it as far as the $80 per barrel psychological level before crashing right back down again, opening up the possibility of the next leg lower in oil futures.
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