Europe
European equities are now fully entangled in the Trump-related sell-off. Yesterday the US market bore the brunt of the move but now it has gone global.
The gains that were made at the beginning of the month are quickly evaporating, and dealers are looking to dump their stocks.
Mr Trump has been close to controversy for some time now, but a story like this will hang around, and that is precisely the reason why traders want to exit the market. Should we see a bounce in European indices, it will more than likely be seen as a shorting opportunity rather than a sign of market confidence.
The FTSE 100 has been hit by the strong pound too on the back of the impressive UK retail sales numbers.
Ashtead (LON:AHT) shares are suffering from both the weak US dollar and the potential disruption to Trump’s infrastructure plans. The British-based company has had a great run since the UK’s EU referendum, as the majority of its earnings are in the US, but now traders are quickly reversing their positions.
A jump in profits and a rise in the dividend from Burberry (LON:BRBY) has helped the company’s share price close the gap that was created on the 19th of April, if the move over the past month continues, the stock could target the 2017 high of £18.37.
US
US indices are narrowly in positive territory after their futures market endured a big sell-off ahead of the official open. One wonders whether this is genuine buying on the hope that this latest political fiasco that Mr Trump has gotten himself into will blow over soon, or if it is simply short covering? The latter seems more likely to me.
A decent set of jobless claims numbers and a strong Philly Fed report from the US reminded traders that the US economy is moving in the right direction, but you can’t ignore the storm clouds gathering over Washington DC.
Alibaba(NYSE:BABA)’s shares are in the red after the company posted earnings that missed estimates but the 60% surge in revenue is helping the stock make up for lost ground. The company was at a record high two days ago so today’s earnings miss could provide an entry point for fresh buyers.
FX
The bounce in the US dollar has taken the edge off of the EUR/USD’s gains over the past few days but as long as the currency pair holds above the $1.10 level its outlook will remain positive. The GBP/USD has given back nearly all the gains it made against the greenback after the stellar UK retail sales numbers, the trend is clearly to the upside so we may see new long positions being created in around the 1.30 region. Don’t be fooled by the rise in the US dollar today, a story this serious involving the US President will not disappear any time soon.
Commodities
The risk-on attitude adopted by investors today has driven gold lower, and the strength of the US dollar has only compounded the problems for the precious metal. Gold is currently being supported by the 50-hour simple moving average (SMA) and should that level hold, the bullish trend we have seen lately will remain in tack. If the scandal surrounding Trump continues to hang around, the safe haven status of the metal may be in demand in the days to come.
Brent oil is currently trading at $52.29. The energy has been trapped in between a range of $51 and $52.43 for the past few days and traders and keeping an eye out for a breakout.
WTI is in a similar position, its range has been between $48 and $49.56, and it is near the top-end of the range at the moment. The strong dollar today has failed to put a dent in the oil market, and traders are mindful of the OPEC meeting next week.
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