The rally in the single currency has dented the Continental markets. 

Europe

The rally in the single currency has dented the Continental markets. The stronger than expected growth rate in Germany propelled the euro higher, and in turn dragged the DAX, CAC 40 and IBEX 35 lower.

The slight weakness in the pound has assisted the FTSE 100, and the positive results from Vodafone also propped up the British market as the stock is a large component of the index.  

Vodafone posted a strong set of first-half figures. The company revealed a 32.5% jump in operating profits, and the decline in costs feed into that rise in earnings. The dividend was raised by 2.1%, and asset sales in India helped bring down net debt by 15%. The company’s previous full-year guidance was an increase of 4-8% on last year’s profits, and that has been raised to a 10% increase on year’s earnings figure. The stock has been pushing higher since early 2017, and if the rally continues it might target 233p.

The weaker than expected data out of China overnight has put pressure on basic resource companies like Rio Tinto, BHP Billiton, Anglo American and Glencore.  The fixed asset investment, industrial production and retail sales reports all came in below expectations and grew at a slower rate in the previous month.

 

US

US equity markets are weaker today as the move lower that started last week is still in place. Traders are using the uncertainty surrounding the tax reforms that President Trump proposed as a reason to lock in their profits. It appears that the changes to the system may not be introduced as quick as dealers had initially thought, and this brought about some selling pressure.  

Home Depot group posted impressive third-quarter figures. The home improvement group saw a flurry of activity in the wake of Hurricane Harvey and Irma. Earnings per share (EPS) came in at $1.84, while the forecast was for $1.82. Same-store sales jumped by 7.9%, and dealers were anticipating rise of 5.8%. The company also raised its full-year outlook. The stock is up fractionally, and since it hit an all-time high last month, the bullish trend is still intact.

 

FX

EUR/USD surged after the German economy grew by 2.3% on an annual basis in the third-quarter, which was a big improvement on the previous report of 0.8%. The stellar growth figures from the largest economy in the eurozone triggered buying of the single currency. The euro hit its highest level versus the US dollar since late October. The eurozone CPI data on Thursday will be closely watched as Mario Draghi, the President of the European Central Bank (ECB) has previously expressed concern for the weak rate.

GBP/USD is a largely unchanged after the UK inflation data wasn’t as high as traders were expecting. The CPI report held steady at 3%, while economists were expecting it to tick up to 3.1%. It is still well above the Bank of England’s (BoE) target of 2%, but the relief that it didn’t tick higher again initially nudged the pound lower. Sterling has been trading within a tight range in November.

 

Commodities

Gold is continues to be subdued and is still within the tight trading range that it has been in for the past few weeks. The gold market appears to be indifferent to what else is going on around it. Global stocks are weaker, and so in the US dollar but gold can’t seem to push higher. The metal hasn’t moved from its 100-day moving average at $1279 lately.

WTI Brent Crude oil are in the red after the International Energy Agency (IEA) cut its forecast for global demand. That same report stated the US will become the global leader on oil and gas production by 2025 – because of shale producers. This update prompted heavy selling in the energy market as oil price hit 28 month highs not long ago, and traders jumped at the opportunity to lock in profits.

 

 

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