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Stocks mixed ahead of Fed

Stock markets in Europe are a mixed bag and trading ranges are likely to be narrow as investors will be waiting for the US central bank update this evening.      

TUI AG shares are up 2.4% after the travel company posted an 11.7% rise in revenue, and a 12% jump in underlying pre-tax earnings. The company stated it is seeing strong bookings for its European destinations, while trips to Turkey and North Africa are ticking up too. Demand for cruises in the Caribbean is still ‘subdued’ due to the aftermath of hurricanes in autumn. The share price of the company has been in a strong upward trend since June 2016, and today it hit an all-time high, and it is likely the bullish sentiment will continue.

Dixons Carphone shares are up 3.9% after the company stated it had a record Black Friday in all regions and it is ‘reasonably optimistic’ about the Christmas period. The company registered 60% decline in first-half profits to £61 million, but that included a one-off charge of £58 million. The retailer acknowledged the mobile phone division needs to be made ‘simpler’ and ‘less capital intensive’. The share price has been losing ground for the past two years, and if the bearish move continues it could target the 120p region.

GBP/USD edged lower after the unemployment rate held steady at 4.3%, and traders were expecting it to fall to 4.2%. The claimant count ticked up to 5900 from 1100. On the bright side, average earnings ticked up to 2.3% from 2.2%.

EUR/USD is largely flat on the day and volatility is likely to remain low as traders await the last Federal Reserve update for the year this evening. Eurozone industrial output on an annual basis rose by 3.7%.

At 7pm (UK time) the Federal Reserve will announce their interest rate decision, and traders are anticipating a rate hike of 0.25%. The press conference will follow at 7.30pm (UK time), and that is likely to be the highlight of the update. Since the break-down of the Fed will be very different in 2018, dealers are somewhat in the dark as to what direction the central bank will take next year.

We are expecting the Dow Jones to open up 17 points at 24,521, and we are calling the S&P 500 down 1 point at 2663.


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