European equity markets are a mixed bad today but the common theme has been relatively low volatility, and a narrow trading range.

Europe 

. The bullish move in natural resource stocks has helped the FTSE 100 stay in positive territory, but if it wasn’t for the oil & gas industry and the mining sector it is likely the London index would be in the red.

Pendragon share gapped higher today even though the company revealed a decline in earnings. A fall in revenue from new vehicle sale contributed to the 20% decline in profits. The company offset this by a solid performance in the used car department and the aftersales division. The company is aware of its shortcomings, and it’s going to dispose of its US business and focus on I.T. and ‘provide an online and technology platform’. The share price is up 17% today, but has been in decline for two years, but a move above the 200-day moving average at 29.5p could negate the bearish trend.

TUI AG shares reached an all-time high today, which is impressive seeing as the broader market has been in retreat for the past couple of weeks. The travel company revealed that revenue rose by 8.1%, and the loss more than halved when compared with last year, but that included a one-off charge in relation to Air Berlin’s Niki business going bankrupt.  TUI stated they are ‘well positioned’ and the business is ‘progressing in line’ with expectations. Should the bullish sentiment surrounding the stock continue, it might target 1700p.

US

Stocks are in the red in the US as traders have their doubts about the recovery. The Dow Jones, S&P 500 and NASDAQ 100 are lower on the day, but not by much. Dealers don’t know which way to turn as uncertainty persists, and a lack of direction is adding to the fear that we could see another sell-off. The volatility index (VIX) has edged higher today, and that is the gauge that everyone on Wall Street is looking at. It is a bit concerning the weakness in the US dollar in the past two sessions couldn’t entice buying today, it seems that dealers are more content to be in bonds or gold.

Jerome Powell and Loretta Mester of the Federal Reserve issued statements today. Mr Powell, the Fed Chief said he will ‘remain alert to any financial stability risks’ and the US central bank is ‘gradually normalising rates’. Whereas Ms Mester has seen ‘some welcomed pickup in inflation’. The updates point to further tightening of monetary policy, which suggest the central bankers are happy with the state of the US economy.

FX

GBP/USD is higher today as the firmer than expected consumer price index (CPI) figures from the UK propelled the pound higher. Inflation in the UK remained at 3%, which topped analysts’ expectations of 2.9%. The core inflation figure jumped to 2.7%, up from 2.5%. Yesterday we heard from Gertjan Vlieghe and Ian McCafferty of the Bank of England (BoE) who were a touch on the hawkish side, and today’s data adds to the argument the BoE could hike rates in May. Even though the pound has come under pressure in recent weeks, it remains in the upward trend it has been in since March.

EUR/USD has been pushed higher on the back of the weakness in the US dollar. There were major economic announcements from the eurozone or the US today, but the weakness in the greenback for the second day in a row is helping the euro. Since early November the single currency has been in an upward, and the dip in the dollar is assisting the move.

Commodities

Gold is slightly higher on the day due to the slid in the US dollar, and the risk-off attitude is helping it too. The metal is often popular with investors when there is uncertainty in equities and that is feeding into golds push higher today. The commodity started to push higher in early December, and even though it lost ground last week, the upward trend is still intact.

WTI and Brent Crude oil are lower again after the international energy agency (IEA) warned that global over-supply could be an issue for OPEC now that US oil production is at a record level. The IEA suggested the US could overtake Saudi Arabia as the largest producer of oil in the world.  

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