Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Stocks Endure Sell-Off As Slowdown Fears Ramp Up

By CMC Markets (David Madden)Market OverviewOct 02, 2019 18:12
uk.investing.com/analysis/stocks-endure-selloff-as-slowdown-fears-ramp-up-200433148
Stocks Endure Sell-Off As Slowdown Fears Ramp Up
By CMC Markets (David Madden)   |  Oct 02, 2019 18:12
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Europe

Equity markets have suffered severe losses today as traders remain worried about the state of the global economy. In London, the energy sector plus the mining sector are nursing large losses on the back of the dismal manufacturing reports from major economies around the world this week. British banks in addition to insurance groups have been knocked by worries in relation to Brexit. Boris Johnson has proposed that Northern Ireland remain in regulatory alignment with the EU in relation to goods as well as agri business. The proposals from Prime Minister Johnson have been initially supported by the DUP, but there is still a way to go yet to get everyone onside. The prospect of a no-deal Brexit is weighing on financial stocks, as the Bank of England are likely to cut rates should that occur. Bank’s lending margins are usually squeezed in a lower interest rate environment, hence the declines across banks and insurers.

Dave Lewis was drafted in to Tesco (LON:TSCO) to turn it around, and now he feels that programme has been completed, he will be stepping down as CEO next year. Mr Lewis joined the supermarket group in 2014, when the company was reeling from a gruelling price war, in addition to an accounting scandal. The rise of Lidl plus Aldi damaged the big four supermarkets, and ‘drastic Dave’ embarked on a tough restructuring plan to steer the firm in the right direction. Stores were closed and jobs were lost, plus the group focused on its core markets. The group posted a respectable set of number this morning, which underlines the success of turnaround plan. Revenue was fractionally higher to £31.9 billion, while operating profit increased to £1.13 billion. The interim dividend was hiked by 58%, plus net debt was trimmed by 7.8%.

Flutter Entertainment (LON:FLTRF), formally Paddy Power Betfair, will buy Stars Group, which will create the largest gaming company in the world by revenue. Flutter will own roughly 55% of the new entity while Stars will own the remaining 45% stake. The move comes as regulation in markets like the UK as well as Australia is tightening, but on the other hand, the US is essentially being opened up to new business. The new combined company should help them expand further into the US as there are strength in numbers.

The WTO concluded the US has the right to retaliate with tariffs with respect to Airbus (LON:0KVV). The trade dispute over tariffs was going on for 15 years, and today the international body found the US can levy $7.5 billion worth of tariffs annually over Airbus. The stock is slightly lower.

US

Stocks are firmly in the red as fears about a recession have gripped the markets. The dreadful ISM manufacturing reading from yesterday is stilling playing on traders’ minds. The ADP (NASDAQ:ADP) report added to the worries the US economy is slowing down. In September, 135,000 jobs were added, while the August report was revised down to 157,000 from 195,000. The fact that both components of the update were underwhelming gave traders more reason to be worried about the health of the US economy. It is obviously great that jobs are being created, but the slowing of the growth rate could be an indication the economy is cooling.

Johnson & Johnson (NYSE:JNJ) shares are higher today after the company paid over $20 million to settle with two counties in the state of Ohio. The settlement will avoid a trail in relation to the nation’s opioid crisis. In the grand scheme of things, $20 million is small beer for a group like Johnson & Johnson, as a potential fine could be a lot worse.

Lennar (NYSE:LEN) posted solid third-quarter figures as EPS came in at $1.59, comfortably topping the $1.32 forecast. Revenue rose by 3.3% to $5.86 billion, exceeding the $5.48 billion forecast. New orders jumped by 8.5%, while the group’s forecast was for an increase of 5.5%-7.6%. California is an important market for the group, the new orders figures were below average, which has caused for some concern for the company. There is a fear that wealthy Chinese investors are holding back on investments while the US-China trade spat is going on. The stock is up 1%.

FX

For all the turmoil in the equity markets, it was been a quiet day on the currency markets. The US dollar index hasn’t moved that much. An absence of major economic news left traders with little to go on, so the trading ranges have been fairly small. GBP/USD is a little lower as traders are worried about Brexit. The suggestions put forward by Mr Johnson have been accepted by the DUP, but the situation is far from solved. EUR/USD has managed to pullback some ground from its recent loses.

Commodities

Gold had been pushed higher by the exodus from equities. Traders are in full-blown flight to quality mode, which has ramped up the gold market. The yellow metal incurred losses recently, but today it is back in fashion as dealers dump stocks.

WTI and Brent crude oil were already in decline today as traders are fearful of a global economic slowdown. The Energy Information Administration report made matters worse, as it showed that US oil stockpiles jumped by 3.1 million barrels, while traders were only expecting a build of 1.56 million barrels.

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.

Original Post

Stocks Endure Sell-Off As Slowdown Fears Ramp Up
 

Related Articles

Stocks Endure Sell-Off As Slowdown Fears Ramp Up

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email