The FTSE 100 is enduring a broad based sell-off as mining, housing, retail and oil stocks are lower this afternoon. 

Europe

The surge in sterling on the back of Barnier’s comments about Brexit sent the internationally exposure index even lower. The EU negotiator is prepared to offer the UK a deal, that hasn’t been offered to any other country, and traders are viewing this as a step in the right direction. 

Petrofac posted a 20% jump in first-half profits, but when you factor in exceptional items the company registered a loss of $17 million. The oil services firm began a major overhaul of the business a number of years ago, and so far this year the group sold-off assets worth $800 million. The group is committed to becoming more lean, and focusing on its core business. The interim dividend was left unchanged. Petrofac won a $600 million contract in Algeria, and it confirmed it is well positioned to win other contracts before the year is out. The share price has been rising since June 2017, and if the upward move continues it could target 700p.

James Fisher shares are higher after the company revealed a solid set of first-half results. Revenue rose by 12% and pre-tax profits jumped by 20%. The marine support division saw growth of 23%, while the other operations saw single digit percentage growth. The interim dividend was increased by 9.5% and the outlook for the remainder of the year is positive. The share price has been pushing higher for the past six months, and if the bullish move continues it could target 2,000p.  

The Turkish lira has sold-off again in the wake of Moody’s downgraded 20 financial institutions in the country. The move wasn’t a major surprise seeing as Moody’s and S&P 500 downgraded Turkey’s national debt earlier this month. It is an all too common procedure, where first the national debt is downgraded, and then the banks come under pressure.

Italian banks are also under pressure after it was reported that the Italian government asked the European Central Bank to buy its bonds as a way to keep its borrowing costs down, and potentially avoiding downgrades from rating agencies.

US

Equities are largely positive as traders are hopeful that trade talks with Canada will go well. Investment sentiment was driven higher by the new agreement with Mexico, and now the focus is on Canada as they are the last piece of the puzzle. The NASDAQ hit an all-time high after Morgan Stanley upped its price target for Amazon to $2,500. The Wall Street titan also issued a $1515 price target for Alphabet.

The US economy grew by 4.2% in the second-quarter, and that was an improvement on the advanced reading of 4.1%, and economists were anticipating today’s reading to be 4%.    

FX

The US dollar index rebounded today after falling to a four week low yesterday. The move higher in the greenback was earlier in the session, and well in advance of the impressive GDP reading. Oddly the growth figures had little impact on the currency.

EUR/USD has been bit by the firmer US dollar. On a quarterly basis, the French economy grew by 0.2%, and that was in line with economists’ expectations. There doesn’t appears to be too much concern about the situation in Turkey or Italy, but that could change in the coming days.

GBP/USD surged after Michel Barnier, the EU negotiator, said he was prepared to offer the UK a deal that has never been offered to a third country. Traders took this as a sign that an agreement between the two sides has a greater likelihood of being achieved. The date to reach an agreement has been pushed back to mid-November, but for now traders are more optimistic about a deal being struck.

Commodities

Gold has pushed higher despite the firmer US dollar. Nearly two weeks ago the metal fell to a 20 month low, and since then the commodity has pushed higher. The wider downward trend is still intact, but the fact that gold managed to make headway in the face of firm US growth figures, suggests we could see the near-term positive trend continue.

Oil jumped after the latest Energy Information Administration report showed a 2.56 million barrel decline in US oil stockpiles, while the consensus estimate was for a drop of 1.39 million barrels. Gasoline inventories dropped by 1.55 million barrels, and traders were expecting no change on the week.

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