Europe 

Stocks are mixed today as the FTSE 100 retreated from an early morning record-high, while the CAC 40 and DAX are enjoying gains. 

Angela Merkel’s Christian Democratic Union (CDU) is hoping to form another coalition with the Social Democrats, but now it appears that a government won’t be formed until March at the earliest. Political certainty would be welcomed by investors but the Germany economy is flying high, even though it doesn’t have a government.  

Mothercare released a profit warning as Christmas sales were disappointing. The company took the decision to keep prices at normal levels on the run up to Christmas, and then offered discounts afterwards, but they festive period failed to be a success. Mothercare now expects annual profits to be in the region of £1 million to £5 million, and previously the market was anticipating profits of £10 million. The retailer has been focusing on its online business but that too saw fewer website visits. The share price fell to an all-time low today so investors are clearly bearish.

Carillion share are up 19.5% today after the company stated it plans to announce a rescue plan in Wednesday. The firm has lurched from profit warning to profit warning in recent months as high debt levels and a cash flow problems. Now the company is seeking assistance to help it bounce back, but the problem is that its bankers don’t want to over expose themselves to the company. Carillion does have a healthy order book of work lined up, it just needs a short-term solution to ensure its survival.

Micro Focus revealed a 2.9% drop in six month revenue, excluding the sales generated at Hewlett Packard Enterprise Software. The drop in revenue spooked traders and so did the management shake-up. Mike Phillips, the current chief financial officer (CFO) will become head of mergers and acquisitions (M&A) and Mr Phillips will be replaced by Chris Kennedy of easyJet. The stock is down 16.6%

US

US stocks are mixed today as the Dow Jones and S&P 500 are slightly in the red while the NASDQ 100 is in positive territory.  American stocks have enjoyed a positive run recently and even though we have seen some profit taking today the outlook is still positive.

Today is a quiet day in terms of economic announcements, but we are expecting speeches from Federal Reserve members Raphael Bostic and John Williams. Mr Bostic is expected to speak at 5.40pm (UK time) and Mr Williams is due to give his speech at 6.35pm (UK time).  These updates will give us an update as to what US central bankers are thinking.

GoPro shares have fallen 23%% today after the company stated it will going to exit the drone business because of tougher regulation and strong competition. The tech company will cut 250 jobs in the process. The CEO Nick Woodman is tightening his own belt as he is now going to cut his salary to $1. The company anticipates fourth-quarter revenue to be a 3% in improvement on the third-quarter revenue.

FX

EUR/USD was under pressure at the start of the trading session as the US dollar bounced back from is sell-off in December. Then Germany announced worse than expected manufacturing orders which fuelled the decline in the single currency. In November German manufacturing orders dropped by 0.4% while dealers were expecting an increase of 0.5%. The euro has been rising against the US dollar since November and today’s pullback may see fresh buyers enter the fold.

GBP/USD was in the red earlier today but has managed to turn itself aroundIn December UK house price fell by 0.6% according to Halifax, and traders were anticipating a reading of 0.2%. Sterling is now higher today and it has been pushing up versus the US dollar for many months now, and this positive trend is still intact.

Commodities

Gold has lost some ground today as the strong US dollar has hurt the metal. There tends to be an inverse relationship between the US dollar and gold, and given how much the US dollar basket has rallied today, the gold market is holding up relatively well.  The metal hit a three and half month high last week and the upward trend from mid-December is still intact, so this negative move may attract buyers.

Brent Crude oil and WTI are in the red has dealers book their profits from last week’s positive move. Anti-government protests in Iran, bitterly cold weather in North American and dwindling US oil stockpiles all contributed to the surge in the energy market last week, and now we are seeing dealers unwind some of their positions.

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