Europe
The political uncertainty surrounding Theresa May is the talk of the City. A report over the weekend stated that up to 40 Conservative Party MP’s are seeking to pursue a vote of no confidence. Prime Minister May is still secure in her position, and the Tory rebels would need to roundup more signatures before they could actually push for this. Nonetheless, the very fact that members of her own party are looking to oust her, severely weakens her position.
In a roundabout way, Theresa May’s troubles a slightly helping the FTSE 100. The remainder of Europe is firmly in the red, but the weakness in sterling has cushioned the fall in the British index. Continental Europe is being hit by the sell-off that begun last Thursday. The shock sell-off in Japan in the latter-half of last week is still being felt around the world.
Taylor Wimpey (LON:TW) started off the week on a positive note with a strong trading statement. The house builder stated it does not see any changes in the behaviour of its customers, even though some dealers have been concerned the UK property market is overheated. The firm is on track to hit its full-year target and it anticipates to keep growing nest year too. Even though the share price was trading higher shortly after the open, it got caught up in the wave of selling and is now down 0.25%. The stock has been pushing higher since June 2016, and if it holds above the 200-day moving average at 190p, it may target the all-time high of 211p.
US
The Dow Jones, S&P 500 and Nasdaq 100 are largely unchanged on the day as traders are still cautious about global equities after the drop off that they suffered last week.
The tax reform debate is still in going on, and even though it appears that President Donald Trump isn’t going to get exactly that he wanted, traders are still a little on the bullish side. A cut to the corporate tax rate would still be welcomed – even if the cut isn’t as deep as originally planned or introduced as soon as some investors would like.
General Electric (NYSE:GE) slashed its dividend by 50% as the company is tightening its belt. The firm is tipped to reveal other major changes to the organisation such as focusing on health care, aviation and power. The stock is down 4% today, and it fell to a level not seen since 2012.
FX
GBP/USD is feeling the pressure, just like Theresa May. The chatter that the UK Prime Minister is being undermined from within her own party has shaken sterling. Mrs May has had a tough six months, and it appears some Conservative MP’s are running low on patience. Even though the pound has lost ground to the greenback today, it is still largely in the positive upward trend since March.
EUR/USD is fractionally higher today but volatility has been relatively low as there were no major economic updates from the eurozone or the US today. Germany revealed wholesale price index (WPI) figures, which showed a cooling of the growth rate, but it didn’t have much of an impact on the currency pair. This week we will find out the latest CPI figures from the eurozone and the US. Traders are fairly convinced the Federal Reserve will hike rates in December, so it may take a lot the push the greenback lower.
Commodities
Gold is popular with buyers taking their cash out of global equities. The metal is higher on the day, and its being helped along by the flight-to-quality effect. That being said, considering the drop in stocks the push higher in gold isn’t that high. The firmer US dollar today is likely potential gain for gold. The metal is still trading near its 100-day moving average at $1277, the metric is almost acting as a magnet for the asset.
WTI and Brent Crude are trading sideways as traders are still on edge about the future global supply. Saudi Arabia are at the centre of the big news stories in the oil market at the moment. The anti-corruption crackdown, and the perception that the Crown Prince Mohammed bin Salman is in favour of extending the OPEC production is freeze is preventing traders from going short, even if they are aggressively buying.
Last week the number of active rigs in the US increased to 738 from 729.
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