Europe
Stock markets in Europe are higher today as dealers overlook the political uncertainties that have been doing the rounds lately. The German election, the Catalan question, and the North Korea situation were all shrugged-off today by investors. There has been no new developments on those fronts, so traders felt a bit confident about buying into the market.
The FTSE 100 has broken through the 7300 mark again, and hit its highest level since the middle of the month. The next potential hurdle for the market could be the 200-day moving average at 7330.
The DAX is near a three month high and the CAC 40 is still in the upward trend that is has been in for the past four weeks.
Carillion (LON:CLLN) share are up 19.3% today as it was reported there is a company from the Middle East that is lining it us as a takeover target. The unnamed firm, is supposedly waiting until Carillion release their interim results on Friday before making a formal offer. Even with the surge in the share price today, the stock is still down 71% from pre-profiting warning level in July. The company is clearly under severe pressure, but some shareholders may not want to get bought out around these levels.
Boohoo (LON:BOOH) had a solid first-half as revenue and pre-tax profits were up 106% and 41% respectively .The firm upped its full-year sales forecast, but investor became wary when the full-year profit guidance was increased too, in fact margins were lowered slightly. The solid start to the trading day didn’t last long as investors quickly dumped the stock, and it fell to a two month low.
US
American stocks markets are in positive territory today as investors await an update from Donald Trump, who is anticipated to deliver a speech on tax reform. The President is very pro-business, and that was a major part of his campaign on the run up to the election.
The corporation tax level is expected to be cut to 20%, and the rationale is that it will encourage American companies with large overseas operations to bring jobs back to the US. Also, a lower corporate tax rate it likely to encourage entrepreneurship domestically.
US durable goods orders for August increased by 1.7%, and traders were expecting a rise of 1%, and the previous reading was a drop of 6.8%. The core figure was 0.2%, meeting expectations, and the July report was 0.5%. The respectable levels of consumer demand will keep traders’ minds focused on the December, especially in light of the comments from the head of the Federal Reserve last night.
FX
The EUR/USD dropped to its lowest level in nearly six week as a broad rally in the US dollar weighs on the single currency. The greenback is stronger an account of a speech from the head of the Fed last night. Janet Yellen’s comments left the door open to another interest rate hike this year, and the euro is paying the price for it. The currency pair is hovering around the 200-week moving average at $1.1722, if the level, can he held we could see a bounce back.
The GBP/USD is also weaker on the day due to the positive move in the US dollar. Traders are now more fearful of an interest rate hike from the US central bank in December. Sterling was already being hit by profit taking before Yellen’s update last night, and now the situation is bring compounded. Sterling has had a stellar run since over the last month, so some profit taking is hardly surprising. The growth figures from the US and UK tomorrow and Friday respectively will be in focus.
Commodities
Gold has dropped to its lowest level in four week as the strong US dollar and the slightly bullish sentiment in the stock markets has made the metal less attractive. Last night, the Fed Chair Janet Yellen, warned that the tightening of monetary policy should not be too gradual. Yellen’s comments added weight to the argument the Fed will hike in December.
WTI and Brent Crude are down on the day as traders have been booking their profits from recent positive run, and the jump in gasoline inventories more than offset the decline in US oil inventories. The energy information agency report showed that US oil inventories fell by 1.84 million barrels, while the stockpile of gasoline increased by 1.1 million barrels.
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