The FTSE 100 as well as the DAX are higher as we approach the close of the trading day on the back of the news that a Brexit deal has been reached.
The news raised sentiment around Europe as it seems that we are approaching the end game of the drawn out political process. In keeping with their tradition, the DUP have said no to the deal, but some elements of the Conservative Party’s eurosceptic wing have backed the agreement. The mood is upbeat as things are moving forward from a political point of view, but Saturday’s vote in the House of Commons will be make or break for the Brexit deal.
The cooling of the British construction sector has hit Grafton Group as the building materials group said that annual profit will be lower this year. The Irish frim cautioned that full-year operating profit for continuing operations would be 4-8% below the consensus estimate. A delay in construction permits in the Netherlands as well as uncertainty on account of Brexit caused the company to lower its guidance. As of today, Brexit hopes have been raised, which should assist the group somewhat.
Moneysupermarket.com saw third-quarter total revenue increase by 4%, but a poor performance at the money division weighed on the stock. The money unit saw revenue decline by 5% on account of ‘continuing challenges in product availability’. Other aspects of the business performed well as the home services division saw a 21% rise in revenue, while the insurance department registered a small increase in revenue. Earlier this week, the stock hit a three month high so traders clearly have high hopes.
Domino’s confirmed that they will exit their international markets as they continue to underperform. The group’s core market is the UK and Ireland, and quarterly UK system sales increased by 3.9% but the ‘international system sales continue to be disappointing’. The firm will close its operations in Switzerland, Iceland, Sweden as well as Norway. The cut and run strategy should free-up cash for more lucrative operations.
Stocks on Wall Street are showing modest gains as US reporting season continues. Earlier today it was reported that China and the US are discussing the next phase of trade talks, which is playing into the positive move too. The US-China trade situation has taken a back seat today, but as long as sentiment doesn’t sour, the feelgood factor should continue.
Morgan Stanley revealed a solid set of quarterly numbers. EPS was $1.21, which comfortably topped the $1.13 forecast. Net interest income was $1.22 billion, while traders were expecting $970,000 million. The revenue derived from fixed income, currency and commodity trading was $1.99 billion, which exceeded forecasts too. The figures were positive all round, hence why the stock is higher.
Netflix shares are higher on the back of the largely positive quarterly figures that were posted last night. Third-quarter EPS was $1.47, which smashed the $1.04 consensus estimate. The number of new subscribers is used as a barometer for the company’s success. The US is their largest market so the growth rate is cooling, an US new paid subscribers were 517,000, while traders were anticipating more than 800,000. On the international side of the business, the group added new 6.26 million new subscribers, which exceeded the 6.05 million estimate. The stock started out strong but has given back some of the early gains. Netflix will face tough competition from the likes of Apple plus Disney down the line, so the boom times might be over.
It was another mammoth day in terms of volatility for GBP/USD as the announcement of the Brexit deal, followed by the DUP’s disapproval for agreement, saw the pound have a huge trading range. Sterling has retreated from its highs of the session, and traders are likely to be threading likely on the run up to the Brext deal vote on Saturday.
EUR/USD have been given a lift by the weakness in the US dollar. The greenback was already under pressure on account of the earlier rally in the pound, and the disappointing US housing data put further pressure on greenback. Both US housing starts and building permits showed declines on the month.
Gold is only marginally higher even though the greenback is down 0.3%. There has been a strong inverse relationship between the two markets in the past year, and if gold can’t drive higher today, the metal might struggle to regain the $1,500 mark
Oil saw a surge in volatility on the back of the Energy Information Administration report. US oil stockpiles grew by 9.28 million barrels while traders were only expecting a build of 2.87 million barrels. The changes in oil stockpiles were balanced out by the 2.56 million barrel draw in gasoline inventories.
Disclaimer: CMC Markets is an order execution-only service. 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. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.