Europe
European equity markets are in the red as the fear regarding the Turkish lira is still doing the rounds. Dealers are cautious that some Turkish banks might struggle to repay their euro and or US dollar dominated loans, and that could ripple out across Europe.
Bayer (DE:BAYGN) shares are in the red after a court in California ruled that “Roundup” weed killer caused a groundskeeper to get cancer. Roundup is a product offered by Monsanto (NYSE:MON), which is owned Bayer. Monsanto were ordered to pay $289 million in damages. The frim strenuously denies that the weed killer is carcinogenic and plans to appeal the decision. Investors are worried this ruling could open the flood gate to similar cases. Bayer’s share price has been in decline since June 2017, and this morning it dropped to its lowest level in nearly five years. If the negative move continues it could target €80.00.
Clarkson (LON:CKN) shares are in demand after the company posted a fall in annual revenue and profit, but still topped analysts’ forecasts. The firm experienced ‘depressed activity’ in the first three months of the year, and the soft US dollar made matters worse. The rally in the greenback should help the firm with future earnings. Clarkson has maintained its full-year outlook and it appears it got all the bad news out of the way in April profit warning. The stock has been recovering since the slump in April, and if the positive move continues it could target 3,000p.
Esure (LON:ESUR) shares have surged after Bain Capital made an unsolicited bid for the firm. The private equity group is offering 280p per share, and that compares with Friday’s closing price of 204p. The approach from Bain comes amid speculation that Sir Peter Wood, the firm’s founder and largest shareholder is keen to offload his stake. The investment company has until 10 September to make an offer or walk away from the potential deal.
US
The major US indices have rebounded today as short-covering has set in. US markets were in better shape going into the Turkish lira crisis, and they continue to outperform their European counterparts. The dip in the US dollar has made stocks more attractive for international investors, as money managers might be looking to the other side of the Atlantic for investment opportunities.
In terms of corporate stories, Netflix (NASDAQ:NFLX) confirmed that CFO David Wells will be stepping down to focus on philanthropy. Mr Wells will stay on at the company until his successor is found.
Tesla (NASDAQ:TSLA)’s CEO, Elon Musk, made it clear that Saudi Arabian sovereign wealth fund have ‘approached’ him several times about taking the firm private. Mr Musk wants to prove that his tweet last week about taking the company private had some substance to it.
FX
EUR/USD bounced back after printing a fresh one-year low in the early hours of trading. Bargain hunters stepped in after the Turkish lira stabilised in the wake of the Turkish central bank liquidity injection. The eurozone is exposed to Turkey, and should the lira take another knock, the euro is likely to suffer.
GBP/USD has been lifted by the dip in the US-dollar. It was a quiet day in terms of economic indicators from the UK, and when dealers booked their profits on the greenback, the pound was given a boost. Sterling remains in the downward trend that began April, and if the negative move continues it could target 1.2590.
Commodities
Gold has fallen to a level not seen since early 2017. The metal has been in a downward trend since April, and even though it hovered above the $1,200 region for a while, the selling pressure was too great and it fell through that metric. The fact that gold is lower on a day when the US Dollar is lower, and equity traders are cautious indicates how negative the sentiment is. If the bearish move continues, it could target $1,180.
WTI and Brent crude oil are a little weaker today as uncertainty about global demand is hanging over the market. The trade spat between the US and China has the potential to hurt global growth and oil demand would wane. Traders will be keeping an eye on the Chinese industrial output and retail sales reports that will be released tonight.
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