The mood in Europe continued to be subdued as there hasn’t been any major macroeconomic news, but investors are a touch on the negative side.  

Europe 

Interserve have been caught up in the Carillion-chaos, as the government is now monitoring the company. Since the collapse of Carillion, Westminster has started keeping an eye on companies that it has contracts with. Interserve aren’t without their own problems, as the company issued a profit warning in October. The stock sold-off heavily in initial trading, but is now only down 1% - it would appear there was an overreaction this morning.

Burberry shares have fallen out of fashion with investors as the turnaround in the pound has curtailed wealthy international shoppers at their UK stores. The retailer enjoyed a flurry of business at its British stores in the wake of the EU referendum, and now that has evaporated. Burberry sis still performing well in China, which is one of its fastest growing divisions. The stock is down 8.8%

Shares in Rolls Royce have jumped by 5.7% after the company stated its thinking about spinning-off its commercial marine division. The company has been reducing its exposure to the oil and gas sector in recent years, and this is a continuation of that programme. The stock hit a 2 month high today.

Pearson shares were dragged lower after the publishing house stated its US business continues to underperform. Restructuring is still going on at the company, and it is ‘on track’, but investors may remain wary until they see results of the turnaround. The share price is down 4% and hit a three month low today.

US

Bullish sentiment has returned to the American equity markets as the Dow Jones, S&P 500 and NASDAQ 100 are all in positive territory. Traders have gotten used to US indices posting record highs on a daily basis, but they are still in their positive trends.

Bank of America revealed a strong set of fourth-quarter figures. Adjusted earnings per share (EPS) came in at 47 cents, while analysts were expecting 44 cents. Revenue for the period was $21.4 billion – which was broadly in line with expectations. President Trump’s new tax laws will force the bank to take a hit of $2.9 billion, but the company will stand to benefit from the tax cuts in the longer run.

Goldman Sachs also announced their fourth-quarter figures and adjusted EPS was $5.68, while traders were expecting $4.91. Revenue was $7.83 billion, which was topped the $7.61 billion anticipated. The will street titan will have to incur a charge in relation to the new tax reforms, which will set them back $4.4 billion. Revenue from fixed income, currencies and commodities (FICC) fell by 50%, which rattled investor confidence.

FX

EUR/USD is weaker today as the bounce back in the US dollar and the underwhelming eurozone CPI data put pressure on the single currency. The cost of living in the eurozone fell back to 1.4% from 1.5% in December. The European Central Bank has expressed concern about the CPI rate on a number of occasions, and it seems to be the one major economic indicator they can’t get to move in their favour. While the reading remains weak, the euro could struggle to push higher.

GBP/USD has had a mixed session as it started out weak, and it now higher on the day. There were no major economic announcements from the UK today, and the only important economic announce from the US was the industrial production report. In December American industrial production rose by 0.9%, which was a considerable improvement on the 0.2% rise in November.

Commodities

Gold is slightly lower on the session as the firmer US dollar has curtailed the metal. Gold hit a new four month high on Monday, and since then it was experienced low volatility. It has gained ground over the past month and the slight pullback have seen could attract fresh buying as the upward trend is still in place.

WTI and Brent Crude oil both fell to the lowest level in over a week this morning, but have been pushing higher over the past few hours. Snice the oil market reached multi-year highs last week we have seen some profit taking. The energy market has been in a strong upward trend since June 2017, and the relative weakness recently could see buyers step into the fold.  

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