Europe
Equities are mixed as we approach the end of the trading session, but broadly speaking it has been a positive week for European stocks. Traders are gradually becoming more confident in the markets as geopolitical fears have subsided a little.
Shares in Interserve (LON:IRV) are in the red today after it announced the FCA are investigating its handling of insider information. In 2016, Interserve decided it was going to exit the energy-from-waste business, and the regulator is investigating the way that information was made public. Interserve has been struggling in recent months and came close to breaking its covenants. The collapse of fellow-construction company Carillion in January put Interserve in the spotlight, and the FCA investigation is likely to keep pressure on the stock.
Zoopla’s owner, ZPG (LON:ZPG), has accepted a takeover offer from Silver Lake (AX:SLR). The US firm has offered 490p per share, which is a 31% premium on yesterday’s closing price. Taking into account that ZPG’s all-time high share price was 401p – in March 2017, it highlights how impressive Silver Lake’s offer is.
Randgold Resources (LON:RRS) is in demand today after the stock sold-off heavily yesterday on the back of disappointing figures. First-quarter profit dropped by 24%, which was blamed on industrial action. The mining company maintained its full-year guidance despite the strikes, and investors have stepped in today and picked up relatively cheap shares.
US
US equities are mixed as the Dow Jones and S&P 500 are higher, while the NASDAQ 100 is in the red. The tech-focused NASDAQ 100 has been the best performer of the major US indices, so a slight pullback today is to be expected. The Dow Jones and S&P 500 have reached multi-week highs, and both indices are starting to step out of the shadows of the sell-off in the first quarter of the year.
The University of Michigan consumer sentiment index jumped to 98.8 in May, up from 97.7, while economists were expecting 98.5. The upbeat numbers adds to the bullish sentiment in the US. The data hasn’t been overwhelming recently and investors are clinging on to whatever positive stories they can get their hands on.
FX
EUR/USD has rebounded today thanks to continued profit-taking on the US dollar. The single currency has suffered at the hands of the stronger greenback recently, and now we are seeing a reversal of that. Given the stellar performance of the euro since late 2016, a correction was overdue, so the decline recently wasn’t a major surprise. Spanish CPI slipped to 1.1% in April, from 1.2% in March. This underlines the fall in demand in the eurozone.
GBP/USD made up for lost ground today after dropping to a four-month low yesterday. The upward move has more to do with US dollar weakness than pound strength. There were no major economic announcements from the UK today, so traders had little to latch on to. If GBP/USD can hold above the 200-day moving average at 1.3545, it might retest the 1.3700 region.
USD/CAD is at touch higher on account of disappointing Canadian jobs data. The employment change in April fell by 1,100, while economists were expecting an increase of 17,400.
Commodities
Gold is higher on the back of the softer US dollar. The metal has been boosted in the previous two sessions on account of the slide in the greenback. Gold is eyeing the 50-day moving average at $1,327, and if it is cleared it might pave the way for $1,350 to be tested. $1,366 would need to be cleared in order to put $1,375 on the radar.
WTI and Brent Crude haven’t moved much from yesterday as traders still remain tense over the Iranian oil issue. The oil contracts have come back a bit from the fresh 42-month highs that were racked up yesterday. Prices might have cooled today, but the bullish trend is still intact.
At 6pm (UK time) Baker Hughes will release the latest rig count reading, and the census estimate is for 800 rigs, down from 834 rigs last week.
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