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Record levels for US markets, sterling firmer too

Stocks are higher in Europe as bullish sentiment has resumed now that traders have gotten over the latest escalation in the US-China trade spat.


The dust has settled in the wake of tariffs being announced, and investors are happy to swoop in and snap up stocks. The absence of negative news has promoted buying.

Diageo warned that the impact of weaker emerging market (EM) currencies would be greater than initially expected. The drinks group now predicts that net sales will be £175 million lower on account of the EM crisis, which is far greater than the £70 million that was originally expected. When EM economies were booming, Diageo took full advantage and were sure to expand their businesses into Asia, Africa and Latin America, but now the shaky economics will hurt the company’s bottom line. North America still remains the firm’s largest market, and this should provide some stability to the company. The stock has been broadly pushing higher for over three years, but it has lost ground since July, and if it remains above the 2,600p mark, its outlook could remain positive.

The showdown for Sky will be settled by Saturday. Fox and Comcast will battle it out for the news company via an auction process, which will begin tomorrow evening, and will be finished by Saturday. Fox will make the first bid as their offer price is lower, and then Comcast will be given an opportunity to exceed that bid, and if it isn’t settled by then, it will proceed to an auction process. In July, Sky posted solid full-year revenue and earnings. The media company has 23 million subscribers, and the investment in original content is ‘paying off’.


The rally has returned as the Dow Jones and S&P 500 have set fresh record highs. The latest round of tariffs that were announced during the week weren’t as severe has some traders were anticipating, and the market has breathed a sigh of relief. The fear of new tariffs proved to be worse than the tariffs themselves, and even though the US and China now have a worse trading relationship, dealers are still optimistic as there is no sign of additional tariffs in sight.

Coco-Cola are contemplating producing marijuana-infused drinks to alleviate physical pain. The drinks giant stressed they are only interested in the properties of cannabis that can reduce pain. Canadian company Aurora Cannabis has been in high demand this week, as they have been in discussions with the drinks firm, and investors are speculating about a possible joint venture.


GBP/USD was propelled higher today after the UK revealed stronger-than-expected retail sales. On a month-on-month basis UK retail sales increased by 0.3% in August, which comfortably topped the -0.2% forecast. Adding to that, the July figure was revised from 0.7% to 0.9%. The respectable report today backs up the broadly positive economic indicators from the UK recently. The pound has been gaining ground versus the greenback for over one month, and if the bullish move continues it could target 1.3361.

EUR/USD was helped by the continued weakness in the US dollar. It was a quiet day in terms of economic indicators from the eurozone. The single currency is been assisted by the cooling of the Turkish lira crisis too. A break above the 1.1750 mark could pave the way for further gains in the currency pair. 


Gold continues to hang around the $1,200 mark, and it is a little worrying that the metal can’t achieve a decent rally today considering the weakness in the US dollar. On previous sessions when the US dollar index was down 0.6%, the move in the metal has been larger. While gold languishes below the 50-day moving average at $1,208, the outlook could remain negative.

WTI and Brent crude oil are in the red after President Trump branded OPEC a ‘monopoly’ and called for lower prices. The US president claimed that many Middle Eastern countries depend for the US for safety and security and that should seek to lower prices as a gesture of goodwill to the world’s only superpower.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.



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