The FTSE 100 has been helped by Boris Johnson’s resignation as foreign secretary, as the drop in the pound lifted the British equity benchmark. 

Europe

The departure of Mr Johnson from the cabinet is a major blow to Theresa May’s leadership, and it could call her future into question.  

Just Eat shares are in demand on the back of an upgrade from RBC. The bank upgraded the stock from ‘outperform’ to ‘top pick’, and it also added it to its European large capitalisation ‘best ideas list’. The share price has been in an upward trend since April, and if the positive move continues it could target 900p.

Mothercare shares have fallen today after the firm revealed plans to raise £32.5 million from existing shareholders through a share issue. Nearly two months ago the group struck a deal with creditors, which acted as a lifeline. The firm now plans to shut 60 stores by June 2019, compared with the 50 that were originally earmarked. The stock has been sliding for five years, and if the negative move continues it could target 13.1p.

Copper has bounced back today, and the positive move has lifted the price of Anglo American, Antofagasta and BHP Billiton. The red metal fell to an 11-month low last week, and the turnaround could assist the mining sector.

US

Equity markets are higher this afternoon as positive global sentiment has prompted buying on Wall Street. The above-average non-farm payrolls report is also playing a role in the upward move. Dealers are snapping up stocks as there is a ceasefire between the US and China regarding their trade spat.

Investors had little to go on in terms of newsflow today, as there were no major economic announcements or corporate updates. The Dow Jones and S&P 500 has been broadly moving higher since early-April and that trend remains intact. Investors are looking ahead to the back end of the week when Wells Fargo, Citigroup and JP Morgan reveal their latest-quarterly earnings. 

FX        

The US dollar index has dropped to a level not seen since mid-June. The minutes from the June Federal Reserve meeting were released last week. The update pointed to a continuation of the monetary tightening policy, but traders are not overly convinced the US central bank will hike rates two more times this year.

GBP/USD experienced a lot of volatility on the back of David Davis’ resignation, and the recent announcement that Boris Johnson has resigned as foreign secretary triggered a wave of sterling selling. The announcements will put major pressure on Prime Minister May. Any signs of a leadership contest in the Conservative party could further weigh on the pound.

EUR/USD is also being helped by the dip in the US dollar. Mario Draghi, the European Central Bank (ECB) chief, announced that interest rates are likely to remain unchanged through to the summer of 2019. This is consistent with what he said at the ECB meeting last month, and he added that the inflation path is rising.

Commodities

Gold has been given a lift by the soft US dollar. The metal fell to a fresh six-month low last week and since then it has bounced back. The Fed claim they are heading in the direction of two more rate hikes this year, but investors are less fearful. If gold’s upward move continues it could target $1,284.

The oil market continues to be in focus as traders remain concerned about supply given that sanctions on Iran will come into play later this year. Even though Opec and Russia are keen to boost supply, the oil market is still relatively firm.

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