Europe
Stocks in Europe are experiencing low volatility and as a result the trading ranges have been relatively small. The FTSE 100 is lagging behind some of its Continental counterparts, as the British index continues its slight decline that is has been in since the middle of the month. The latest UK growth figures will be released tomorrow, and it is likely to have a big impact on the FTSE 100 as is very sensitive to moves in sterling.
The IBEX 35 is slowly recovering of the ground it lost an account of the uncertainty brought about by the situation in Catalonia. The Spanish Senate will vote on Thursday whether to impose direct rule on the region or not, and decision is likely to ramp up tensions.
Whitbread (LON:WTB) registered a 7% increase in revenue and profits for the first-six months of the year. They are continuing to grow their brands – Costa Coffee and Premier Inn. More outlets are being opened up, but investors were concerned about the slowdown in sale growth of coffee. Like-for-like (LFL) coffee sales for the first-half rose by 0.6%, and that is a considerable drop when compared with 2.3% in 2016, and 4.4% in 2015. The stock is down 5.8% today.
Carillion (LON:CLLN) shares surged higher on the open after the troubled construction company announced that it has access to a credit facility of £140 million. The firm recently won contracts worth £271 million and this lending facility will act as an important life line. The stock gaped higher but has been losing ground throughout the session.
US
The Dow Jones notches up another all-time high as strong earnings for blue-chip stocks like 3M (NYSE:MMM), Caterpillar (NYSE:CAT) and United Technologies (NYSE:UTX) helped the index reach another record higher.
Both Caterpillar and 3M comfortably exceeded analyst expectations for earning per share (EPS) and revenue. These stocks are very popular with institutional investors, and are regarded as a good barometers for the state of the US economy.
US manufacturing and services sectors are growing at a solid rate. In October the manufacturing reading was 54.5, and the services reading was 55.9, and analysts were expecting 53.3 and 55.2 respectively. Traders are will optimistic the Federal Reserve will hike rates in December.
FX
EUR/USD is edging higher after France and Germany revealed robust manufacturing and services PMI reports this morning. Both sectors of both economies are performing well, and it helped the single currency get the edge over the greenback. The reports were for October – when the euro was relatively strong, which goes to show how strong their economies are. The European Central bank (ECB) is expected to talk about tapering at their meeting and press conference on Thursday.
GBP/USD is weaker after Sir Jon Cunliffe of the Bank of England (BoE) reiterated his view that a rate hike from the UK central bank is not a done deal. The markets have been pricing in a rate hike for the past few weeks, and now traders are getting nervous that the BoE may not pull the trigger next month.
Commodities
Gold is still weak as traders remain in risk-on attitude, and the slight strength in the US dollar is holding the asset back too. The bullish sentiment in US stocks means there is little appetite for gold, and seeing as the global political landscape is calm, we could see gold keep drifting lower. The stronger than expected manufacturing and services figures from the US as prompted gold traders to be nervous about a possible rate hike from the US central bank in December.
WTI and Brent Crude are higher on the day, but they have been falling throughout the latter half of the trading session. Saudi Arabia stated they are keen to get rid of the global supply glut, and traders took this as a sign they are going to keep the production cap in place. It’s no coincidence that the comments come ahead of the next month’s OPEC meeting. The major oil producer is one of the main drivers behind the co-ordinated production freeze, so their voice is influence within the cartel.
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