Europe
European equity markets lost even more ground in the afternoon session as the political uncertainty in Washing DC has given traders the perfect excuse to bank the previous day’s profits. The FTSE100 held up relatively well in comparison to benchmarks on The Continent. London’s relatively high exposure to commodity related companies has ensured that the sell-off hasn’t been that severe.
The two-week high in both gold and silver has boosted the share prices of miners like Randgold Resources (LON:RRS) and Fresnillo (LON:FRES). The firm price in the oil market has assisted BP (LON:BP) and Royal Dutch Shell (LON:RDSa), but even their gains are slipping away as the overall sentiment is turning negative. Cyber security company Sophos Group announced a double digit rise in revenue and the dividend is up 156% on the year. The timing of the earnings release bodes well for Sophos given the events last week. Shares in Lloyds (LON:LLOY) are up almost 2%, and when you consider the wider market performance today, it is impressive. Traders are clearly cheerful that the bank is back in private ownership, and that the financial institution is in a far healthier position now than what it was when the UK government stepped in during the credit crisis.
US
The Trump administration has put the stock market in a tailspin. Throughout the day the chatter of Donald Trump being impeached was largely confined to social media, but now that Congressman Al Green of the Democratic Party has called for it, traders are taking it more seriously. The latest controversy Mr Trump has got himself into could see him be on the receiving end of a “you’re fired” from the US government. There was so much bullish sentiment behind Trump’s economic policies, but now that he may not even be around to execute them, investors are scrambling to get out. Traders would want to be very brave to try and buy into this dip as the downside is potentially very big. A story like this will not fall off the radar anytime soon, so today’s move could be a blueprint for what lies ahead in the near-term. Target revealed a fall in revenue but the better-than-expected earnings per share (EPS) and positive outlook for the year helped the stock push higher.
FX
The decline in the US dollar has wiped out all the gains it has made since Donald Trump was elected. The speculation about his impeachment is rising and the dollar is falling in tandem. The decline in UK unemployment gave the pound a boost, and the steady inflation rate from the eurozone gave traders a minor reason to buy the respective currencies, but the moves were magnified by the weaker greenback. Make no mistake, the drop in the US dollar is the reason behind in move in the GBP/USD and the EUR/USD.
Commodities
Gold and silver are reaping the rewards of the severe sell-off in stocks. It’s a double win for bullion, as the cheap US dollar and the risk off attitude has sent cash flowing into the precious metals. Oil hit a new high of the day after the Energy Information Administration (EIA) report showed a decline in inventories of 1.75 million barrels.
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