The FTSE 100 is in positive territory as the gains in financial and commodity related stocks are being held back by the weakness in the retail sector.

Europe 

Debenhams share are down 16.7% after the company had to lower its full-year profit guidance after a weak Christmas period. The retailer stated it expects annual profits to be between £55 million and £65 million, which is a substantial drop from the old guidance of £83 million.

Solid services data from Spain, Italy, France and German have propelled eurozone equity benchmarks higher. The loose monetary policy from the European Central Bank (ECB) over the past few years has paid off as the economies within the region are posting stellar economic indicators. This week we saw impressive manufacturing figures from the currency bloc too.

London property prices dropped last year, it was the first decline since the credit crisis. The capital saw average prices fall by 0.5%, which isn’t a major amount, but it has rattled investors. The London-focused homebuilder Berkeley Group are down 1.1% on the back of it. Commercial property companies are also feeling the pressure, British Land, Land Securities and Hammerson are also lower on the day.

US

The upbeat outlook from the Federal Reserve minutes last night has sent US stock to record highs. The Dow Jones has crossed the 25,000 mark and the S&P 500 and NASDAQ 100 have also registered fresh all-time highs. The minutes from the latest Fed meeting last night showed that US central bankers predict a tick up in economic activity from the tax reforms introduced by President Trump.

The strong ADP employment report has set the tone for tomorrow’s non-farm payrolls report. The private sector report showed that 250,000 jobs were added in December, while the consensus was for 190,000. The US also announced the latest jobless claims report which saw an increase from 247,000 to 250,000. The takeaway message from the reports is still positive. The previous two reports for non-farm payrolls were both comfortably above the 200,000 mark -the level that economists say is required to keep the economy growing.  

FX

GBP/USD is higher on the session after the UK saw a strong services sector in December. The services PMI report came in at 54.2, which was an improvement on the November reading of 53.8. The acceleration in the expansion rate is encouraging to see seeing as the services sector accounts for about 75% of the UK’s economic output. The pound has been in a solid upward trend versus the US dollar since March, and with economic updates this it is likely to keep pushing higher.

EUR/USD rallied to a level last seen since mid-September on the back of the robust services figures from the eurozone today. The services sectors of the largest economies in the region have performing well, and this is fuelling buying of the single currency. The euro is nearing a three year high versus the US dollar which gives an indication of how bullish the sentiment is.

Commodities

Gold is marginally higher on the day as trader buy back into the metal after yesterday’s decline. The Fed minutes pointed out that US central bankers are divided in how much of an economic boost the tax reforms will give to the US economy. Traders are factoring in three, or possibly four interest rates this year, and March could see the first hike of 2018. January has been a positive month for gold in the previous two years, and traders are wondering will it be three in a row.

WTI and Brent Crude oil are slightly lower today as traders book their profits from the positive run it has been enjoying recently. The anti-government protests in Iran are spurring the upward momentum in the energy market. Oil has a track record of rallying whenever there is political upheaval in the Middle East, and since Iran is a major oil producer, dealers are fearful.

At 4pm (UK time) the Energy Information Administration (EIA) will announce the latest oi land gasoline inventories, and traders are expecting a draw of 5.4 million barrels and a build of 2.3 million barrels respectively.  

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