Stock markets are largely lower as traders are worried about the US-China trading relationship as well as the violence in Hong Kong. 

Europe

Global equites rallied last week as progress was made in relation to the US-China trade discussions, but since then the situation doesn’t look as rosy. President Trump said he never agreed to roll back all the tariffs that were imposed in September, and more recently he said he would only sign a deal if it was the ‘right deal’. The US leader claimed that China are more desperate to strike an agreement than he is, but not many traders are buying that seeing as he is up for re-election next year, whereas Beijing can play the long game.

The violence in Hong Kong rattled traders in Asia, and some of that sentiment has spilled over to Europe. The unrest is getting worse on reports that two people are in critical condition. The business hub is already in recession, so the escalation in violence is likely to make matters worse.       

Traders have big appetites for Greggs’ shares today after the company upgraded its full-year profit outlook. The firm confirmed that total sales in the six weeks until early November increased by 12.4%, and now the group expects annual profits to be above the previous guidance. Today’s news put the stock back in the good books of traders as last month the company revealed a slowdown in sales – which triggered a sell-off. The optimistic announcement today helped the share price claw back some of the ground lost last month.

Sirius Minerals declared that it has a two-part approach to keeping the company moving in the right direction. The firm cried out for new investors after it had to drop plans to issue debt in September. Capital is crucial for business, and that is especially the case for Sirius as it needs to raise funds in order to unlock extra cash from JPMorgan. Shortly after the beginning of trading, the stock was up in excess of 40%, while now it is only up 10%, which highlights the rapid change in sentiment. Without additional cash, the company won’t be able to progress to the next stage of development, so traders are unlikely to swerve the stock.

It has been a quiet day in terms of corporate stories but there were a few changes to broker ratings. UBS cut its price target for Beazley to 630p from 650p. HSBC upped its price target for Aston Martin to 550p from 533p.

US

Equity indices have retreated a little from the record-highs that were posted last week. President Trump has taken some of the wind out of the bulls’ sails as he has tempered expectations in relation to striking a trade deal with China. Donald Trump once again claimed that he would only sign a deal as long as it was the ‘right deal’. It isn’t a negative update, but it is not upbeat, hence why we have seen some profit taking. Trading volumes are light as it is Veterans Day. 

Walgreens Boots Alliance shares are in demand after KKR, a buy-out firm, has made a formal offer for the company. Walgreen has been mulling the idea of going private to obtain a lower profile, so they wouldn’t be at the mercy of the markets. The firm is undergoing a restructuring scheme as online shopping is squeezing the business, while pharmacies are under pressure from insurers too in relation to prescription fees.

Alibaba had tremendous success with the Singles Day event as it was a record in terms of gross merchandise value – it topped last year’s level of 213.5 billion yuan. The e-commerce giant offered generous discounts to draw in customers, which have clearly worked. Influencers were used to push certain products, and the tactic has paid-off.  Despite the record Singles Day, the stock is a little lower.   

FX

GBP/USD was given a boost by Nigel Farage’s Brexit Party as the new political party will not field candidates in seats the Conservatives won in the 2017 general election. In advance of the announcement, there were some fears there could be a hung parliament post the December election, but now seeing as the Brexit Party will largely target Labour held seats, the possibility of a hung parliament has reduced. As it stands, the Tory party don’t have a majority so Boris Johnson will need to build on the existing seats to secure command of the House of Commons, so sterling might find it difficult to retest 1.3000.

EUR/USD is a little higher thanks to the broadly softer US dollar. German wholesale price index dropped by 2.3%, and Italian industrial output slipped by 0.4% on a monthly basis. The updates add weight to the argument the major economies of the eurozone are struggling.

Commodities

Gold is lower again as the recent bearish move continues. On Friday, the metal dropped to a three month low, but that was driven by a firmer US dollar in addition to a risk-on attitude of traders. Today, the metal is in the red despite the pullback in global stocks as well as the dip in the greenback. Should the metal keep moving south it might target the 1430 mark.

Oil is subdued today as traders are cautions about the US-China trade situation. China is the largest importer of oil in the world so dealers are a little nervous the positive chatter surrounding trade has faded a little. The energy market has recently taken its cues from the macroeconomic mood, which is a little subdued today, hence why WTI plus Brent Crude are trading sideways. 

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