The FTSE 100 is underperforming its continental counterparts as a decline in consumer and mining stocks is holding the British equity benchmark back. 

Europe

Dealers are optimistic about the trade talks between the US and China, despite the less cheery tone from Washington DC and Beijing. The relative calm surrounding the Turkish lira is also adding to the positive mood on the continent. 

Persimmon shares have slipped into the red even though the firm released respectable first-half figures. Revenue and pre-tax profits rose by 5% and 13% respectively, and the average selling price ticked up 1.2%. Underlying operating margins rose to 29.7% from 27.6%, and this points to improved efficiency. The company has a lot of work in the pipeline as the forward sales book is up 6%, and the group confirmed it is on track to achieve ‘high quality, sustainable growth’. The homebuilder is confident in its ability to generate strong cash flow, and it is committed to its generous dividend policy. The share price has been losing ground since June, and if the bearish move continues, it could retest the 2,300p area.

BHP Billiton shares are in the red after the company registered a 37% fall in full-year net profit. The firm took a hit of $5.2 billion in a relation to a shale gas impairment. Stripping out the charges, the firm posted a 33% rise in underlying profit. The dividend was hiked by 83% to $1.18 – a record level BHP Billiton now anticipates savings of $1 billion, and that compares with the prior forecast of $2 billion.  The stock has been broadly pushing higher since January 2016, and if the upward trend continues it could target the 1,750p region. 

John Wood Group confirmed that first-half earnings slipped by to $260 million, but the consensus estimate was $250 million. Revenue for the period rose by 13.4%, and the interim dividend was nudged slightly higher. The company now expects its three-year cost synergy to be at least $210 million, and the previous forecast was $170 million. The group is confident of ‘delivering a stronger second-half’. The share price hit its highest level in over a year and a half, and if the upward trend continues it could target 750p.

US

Stocks are pushing higher as the positive momentum continues. The S&P 500 is on the march, and traders have been talking about the all-time high so much, it is almost as if it has become a magnet for the market. US stocks have been made more attractive to international investors due to the dip in the US dollar.

Traders seem to be more optimistic about the trade talks between the US and China, than the politicians. President Trump doesn’t ‘anticipate much’ from the talks and there is chatter he is going to add a new round of tariffs on Chinese imports this week. It could easily be a ploy by Mr Trump, but he does have a reputation of being unpredictable.

Kohl shares are in the red even though the company reported a strong set of second-quarter results. Earnings per share jumped by 40% to $1.76, which smashed the forecast of $1.24. Same-store-sales rose by 3.1%, while the consensus estimate was 2.7%. The company has an edge over its competitors thanks to its tie-up with Amazon.  

FX

The US dollar has slipped – which should keep President Trump happy, as he wants a soft greenback to make US exports more attractive. Tomorrow, the US and China will re-start trade negotiations, and Mr Trump has accused China of deliberately weakening their currency. Jerome Powell, the head of the Fed disappointed Donald Trump by hiking interest rates, and helped drive up the value of the greenback in recent weeks.

EUR//USD has been boosted by the pullback in the greenback, and it has broken above the 1.1500 mark. There were no major economic announcements from the eurozone today, so any move will be dollar driven. Should the euro drive higher from here, it could encounter resistance at 1.1614.  

GBP/USD has also been lifted by the dip in the dollar. The UK revealed mixed economic updates today, the government had a public sector surplus of £2.9 billion in July. The Confederation of British Industry industrial orders expectations report slipped to 7 in August, down from 11 in July. Sterling has enjoyed a positive run recently, and if the upward move continues it could target 1.2957.

Commodities

The dip in the US dollar has boosted the gold market. The metal hit a one-week high today, and the move lower in the greenback prompted traders to snap-up the relatively cheap metal. Last week, gold fell to its lowest level since early 2017, and bargain hunters are propping up the market this week. $1,200 could be retested should the recent bullish move continue. 

WTI and Brent crude oil are higher as traders are worried about sanctions being imposed on Iran. The trade talks between the US and China kick off tomorrow, and they will be interesting, as it was reported that Beijing will are keen to continue trading with Iran after the sanctions are reimposed. Should the trade talks go well, there could be renewed optimism about the state of the global economy, which might prop up the oil market.

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