Europe
The trade agreement between the US and Canada has lifted global sentiment. The deal was reached before the deadline, and it spurred on traders to snap up stocks. Mexico and the US agreed their deal in late August, and investors were waiting on the US-Canada component, and now it has been reached. The positive news acts as a nice distraction regarding the US-China trade spat. In London, the FTSE 100 is in the red as financial and mining stocks are lower.
Ryanair (LON:RYA) issued a profit warning, and the group blamed lower airfares, higher fuels costs and compensation for the lower guidance. The firm now anticipates profit to be in the range of €1.1 billion to €1.3 billion, and that compares with the previous guidance of between €1.25 billion and €1.35 billion. Ryanair have had a difficult year, and it has been largely their own fault. The pilot roster fiasco, and industrial action brought about mass cancellation of flights, and some customers may not fly with the airline again given the recent uncertainty. The stock has been in a downward trend since August 2017, and if it continues it could target 1,100p.
Royal Mail (LON:RMG) shares sold off sharply after the company confirmed its full-year performance to be ‘significantly’ below target. The company described the UK productivity and cost performance as ‘disappointing’ and said conditions are ‘challenging’.
Deutsche Bank (DE:DBKGn) issued a ‘buy’ rating for United Utilities (LON:UU) and raised their price target to 850p, from 820p. The announcement from the investment bank comes after the utilities company issued a positive trading statement at the end of last week.
Tesco (LON:TSCO) shares are in the red this afternoon after the company was fined £16.4 million in relation to a cyber-attack in 2016. The company said they are ‘very sorry’ that clients’ money had been stolen – which has since been refunded. The Financial Conduct Authority claimed the cyber-attach was largely avoidable, and it has zero tolerance for firm’s that don’t protect their customers. Tesco will reveal their first-half figures on Wednesday. The stock has been broadly been pushing higher since January 2016, and while it remains above the 200-day moving average at 232p, its outlook could remain positive.
US
Stocks have rallied due to the trade deal that was struck between the US and Canada. President Trump has been keen to replace the North American Free Trade Agreement (NAFTA) and that Canada has signed up to the new arrangement traders are snapping up stocks. Mr Trump claimed that NAFTA was a bad deal for the US, and now he can claim another victory for the US. Donald Trump has many opponents, but US investors are cheering on his economic policies.
Tesla (NASDAQ:TSLA) shares have jumped today after Elon Musk, struck a deal with the Securities and Exchange Commission. Mr Musk will have to pay a fine of $20 million and step down as chairman, but he is allowed to stay on a CEO. Traders feel Mr Musk got off lightly and are snapping up the stock.
FX
GBP/USD was given a lift after it was revealed the UK government are prepared to soften their stance in relation to the Irish border, and that could make a deal with the EU more likely. It was reported that the government could allow some checks in the Irish Sea. Some members of the Conservative Party may been keen to pursue such a policy, but the DUP – who are propping up the Tories, are unlikely to agree to such an arrangement. The pound has been pushing higher since mid-August, and while it holds above the 1.3000 mark – its outlook could stay positive.
EUR/USD had a mixed session and now it in the red. The manufacturing PMI reports for Germany and France both were unchanged from the preliminary readings. The unemployment rate in Italy dropped to 9.7%, and economists were expecting 10.5%, but the announcement had little impact on the single currency.
Commodities
Gold is in the red again as the metal didn’t recover from the sell-off it endured at the back of last week. The metal is sensitive to the perceived actions of the Federal Reserve, and since traders are pricing in a high probability of a rate hike in December, the commodity might remain in its bearish trend.
Oil continues to drive higher as traders are concerned about future supply. It is just over one month until the US’s sanctions on Iran will kick in and dealers are worried about supply levels. Saudi Arabia are not in a position to make up the difference, and that is adding to the upward move in the energy market. Brent crude and WTI have both been driving higher since August, and the bullish trend could continue.
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