Europe
It was a choppy session in Europe as the announcement of tariffs on US goods by China caught traders by surprise, and the update from Jerome Powell helped counteract the losses that incurred in the wake of the tariffs update. China will introduce $75 billion worth of tariffs on US imports, and the levies will target items like soya beans, oil and vehicles. Some levies will kick in early next month, while other levies will be introduced in December. Not long ago, Trump tweeted he would reveal his retaliation on China this afternoon, and equity traders were sent running for the hills.
Entertainment One (LON:ETO) shares jumped today on the back of the 560p bid offer from Hasbro, and that values the company at approximately at £3.3 billion. Hasbro is a toymaker and the acquisition of Entertainment One should bring about cost savings of $130 million by the year 2022, and the plan is to incorporate a lot of Entertainment One’s toy making into the new group. In August 2016, Entertainment One rejected a takeover attempt by ITV (LON:ITV), and that was sensible move given ITV’s poor performance in the past few years.
Kingspan Group (LON:KSP) revealed a solid set of first-half figures, but the outlook was a little cautious, and traders clung onto that message. Revenue and trading profit jumped by 12% and 18% respectively and both reached ‘record levels’. The company claimed there were a few ‘clouds on the horizon’, and that took the shine off the impressive numbers. The UK and German units saw a cooling in activity, and that isn’t a major surprise given that both economies saw negative growth recently.
US
Stocks have dropped off after Mr Trump said he would get back at China for their latest announcement of tariffs. The ire of the US president can be felt in the markets as dealers are dumping stocks. Jerome Powell issued a mixed update earlier in the day, but that seems like old news now. The central banker said he was ready to act in terms of adjusting monetary policy, and in light of the heightened tensions between Washington DC and Beijing, Mr Powell might well be cutting rates next month, even though he delivered a largely neutral update.
Salesforce.com (NYSE:CRM) shares are up on the back of the solid second-quarter figures. EPS came in at 66 cents, which comfortably exceeded the 47 cents forecast. Revenue jumped by 22% to $4 billion, which narrowly topped predictions. Sales Cloud and Service Cloud posted revenue increases of 13% and 22% respectively. The group upped the full-year sales forecast too.
HP Inc (NYSE:HPQ) shares sold-off despite largely positive third-quarter results. EPS were 58 cents, and the consensus estimate was 55 cents. Revenue was $14.6 billion was that was just shy of forecasts. The full-year EPS guidance was raised too. The previous guidance was for between $2.14 and $2.21 and it is now $2.18-$2.22, while equity analyst were expecting $2.18.
FX
USD/CAD is largely unchanged on the due to mixed Canadian sales data, and the update from Jerome Powell. In June Canadian retail sales were flat, and economists were expecting a decline of 0.1%, but the previous report was revised to -0.2%. The report that strips put auto sales grew by 0.9%, which might suggest that Canadians don’t want to make big purchases. Weakness in the greenback was offset by the drop in oil.
EUR/USD and GBP/USD saw high volatility on the back of Trump’s recent tweets, and the US dollar has taken a beating as traders await the retaliation form the US President. There is speculation the US will start buying the yuan, and in turn push down the greenback, and that has helped the pound and the euro.
Commodities
Gold has gained some ground on the back of the Chinese tariffs and the drop in the US dollar. The announcement of the new tariffs from Beijing has set the trading relationship back a little and the metal benefitted as traders adopted a more risk-on strategy. While the metal holds above the $1,500 mark, the bullish move should continue.
WTI took a major knock and Brent crude is lower too in the wake of China declaring plans to slap tariffs on US oil imports come early September. China is a major importer of oil while US is an exporter of the energy, and today’s news had hit the WTI hard.
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