Europe
European stocks spent much of the session in the red as trade tensions weighed on investor sentiment. The G7 meeting gets under way today in Quebec, and investors are cautious as certain trading relationships are a little strained.
Standard Life Aberdeen (LON:SLA) shares are lower today after Lloyds disposed of their remaining shares in the fund manager, which accounts for 3.3% of the company. In February, Lloyds (LON:LLOY) served its notice on the agreement it had with the asset manager, and the relationship between the two businesses has been in decline since. Standard Life Aberdeen derives roughly 5% of its revenue from the contract with Lloyds. The stock price has been falling since January, and if the bearish move continues it might target 336p.
BT (LON:BT) revealed that CEO, Gavin Patterson, will leave the company later this year. The firm has been struggling lately, and last month Mr Patterson announced an ambitious restructuring plan, hoping to save the company £1.5 billion. It is believed that a number of influential investors have lost confidence in Mr Patterson and they would like to see someone else lead the frim through the restructuring period. Mr Patterson was appointed CEO in September 2013, but since February 2016, the stock has dropped 59%, and this has put additional pressure on him.
US
The Dow Jones and S&P 500 are in the red as uncertainty about trade talks weigh on sentiment. The G7 meeting will be in focus today as tensions have been heightened regarding trade negotiations. President Trump has hit out at the high tariffs imposed on US goods, and he is keen to get a better deal for the US. Investors will be watching events closely to gauge the mood of the meeting, as the prospect of a trade war might shake market confidence. The US president is unlikely to be popular with the other G7 politicians, but he is determined to alter the US’ global trading relationship.
Apple (NASDAQ:AAPL) shares are in the red after an article in the Nikkei newspaper claimed that the company is placing fewer orders with suppliers. The tech giant is expected to release three new iPhones in the second half of this year, and it was reported the company is taking a ‘cautious’ approach to shipments. The stock has been in a solid upward trend since May 2016, and if the bullish move continues it could target $200.
FX
The US dollar index has rebounded after being in decline for over a week. The tough stance President Trump has taken regarding trade is helping the greenback. Protectionist policies can drive up inflation due to higher import costs, and in turn the US dollar is firmer.
GBP/USD took a knock after the EU’s Chief Negotiator, Michel Barnier, announced that Theresa May’s ‘backstop’ plan can’t be applied to the entire UK. The backstop was designed especially for Northern Ireland, and Mr Barnier confirmed it can’t be ‘extended to the whole UK’. The EU official announced that discussions regarding customers will still continue.
EUR/USD has been hit by the stronger US dollar. The disappointing data from Germany and France made matters worse for the single currency. In April, German and French industrial production fell by 1% and 0.5% respectively. The report paints a picture of an underperforming eurozone.
USD/CAD is higher this afternoon as a robust US dollar, coupled with mixed Canadian data, lifted the currency pair. The Canadian employment change report showed a drop of 7,500 jobs in May, while economists expected an increase of 17,500. Housing starts rose by 195,600, but the consensus estimate was for an increase of 218,000. The currency pair has been broadly moving higher since February, and if the positive move continues it could target 1.3124.
Commodities
Gold is largely unchanged today, despite the firmer US dollar. The metal has been experiencing low volatility in recent sessions. The asset has struggled to move above its 200-day moving average at $1,307. The Federal Reserve is widely expected to raise interest rates next week. Buyers are likely to be wary on the run-up to the central bank meeting.
WTI and Brent Crude have been subdued today as China’s demand for the energy dropped from a record high. Imports dropped by 4.1% in May, partially because state-run refineries began planned maintenance, and partially because some plants were instructed to trim operations as part of an environmental initiative.
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