Political uncertainty in Italy has rocked stock markets around Europe.  

Europe

Matteo Salvini, the joint Deputy Prime Minister has filed a motion of no confidence in the Prime Minister Giuseppe Conte, and it seems the country is heading for a general election. The third largest eurozone member has a fragile banking system, and the country has a massive national debt, and a new election is likely to destabilise the nation. 

Adding to the declines are the strained relations between the US and China, as President Trump claimed he ‘won’t be doing business with China’. The US-China trade spat has a technological element to it, and Beijing won’t like the latest development, so the uncertainty is likely to spill over into next week.        

WPP shares are higher today after the group confirmed that like-for-like second-quarter revenue slipped 1.4%, which was better than the -3% that traders were expecting. Keep in mind that the firm posted a 2.8% fall in LFL sales in the first-quarter, so today’s update is a sign that the things are heading in the right direction. The group reiterated its full-year guidance too. The company has undergone restructuring in recent years to adapt to the way companies advertise, and WPP highlighted that its new strategy is paying off as it got new business from eBay and Instagram. The stock seems to have found a floor at 800p, and a break above the 1,000p mark might bring the 1,100p area into play.

William Hill registered a 33% fall in operating profit, but that was partially on account of the tighter regulation in relation to fixed odds betting, and the costs of closing down 700 betting stores too. In light of the change to the fixed odds betting in the UK, the group is keen to expand overseas and online. The company has been making head way into the US in light of the changes to gaming laws. At William Hill, online and international revenue now accounts for one third of group revenue, and it jumped by 66% in the six month period, so the group is making a pivot towards expanding markets.                    

Bayer said it has proposed a settlement of $8 billion in relation to Roundup, and the funds would be used to settle more than 18,000 US lawsuits. The news comes as the group’s CEO, Werner Baumann, said the firm would contemplate coming to an agreement to wrap up all the cases, as long as it was on reasonable terms. The legal case has been hanging over the stock, and today’s announcement sent the share price to its highest level since March, and if the bullish run continues it might target the €73.00 mark.                

US

The S&P 500 and NASDAQ 100 are in the red as the latest comments from Mr Trump have added to the tensions between the US and China, and dealers are trimming their equity positions after last night’s impressive rally.

Uber shares sold-off sharply today after the company revealed dreadful second-quarter figures last night. The loss for the period was $5.2 billion, and revenue was the timeframe was $2.87 billion, which undershot the forecast of $3.05 billion. Monthly active users jumped by 8.8% year-to-date, and gross bookings are expected to increase by between 31% and 35% year-on-year basis. Uber eats delivered a 72% jump in revenue this quarter. Its popularity is clearly growing, but the latest loss was colossal, and the group is tipped to post a full-year loss of $3.2 billion, and then ‘see losses come down’ in 2020 and 2021’, but trades patience might start to wear thin. The poor numbers were made to look even worse when compared with Lyft’s update during the week, as the group posted quarterly revenue growth, and lifted the full-year outlook.  

Broadcom confirmed that it will buy Symantec’s enterprise security business for $10.7 billion, and Broadcom predicts it will achieve in excess of $1 billion in cost savings on the back of the deal.

CBS shares are in demand after the company posted a strong set of second-quarter results. EPS was $1.16, which topped the forecast of $1.12, and total revenue jumped by 10% to $3.81 billion, which topped the forecast to $3.72 billion. The group cited a rise in distribution fees, licencing content, and the popularity of the NCAA men’s basketball tournament.             

FX

GBP/USD has sold-off as UK second-quarter GDP was -0.2% as concerns about Brexit has weighed on the economy. Consumer activity has been fragile as some people have been holding off on making purchases. The housing market has been cooling, and the services sector has seen minimal growth too. It was the first negative quarter since 2012, but it is worth noting that the UK economy emerged from the credit crisis ahead of many of eurozone nations. EUR/GBP rallied on the back of the poor UK growth figures.    

USD/CAD jumped on the back of the disappointing Canadian jobs data. The unemployment rate edged up to 5.7%, while economists were expecting it to remain on hold at 5.5%. The employment change dropped by 24,200, while traders were anticipating an increase of 12,500.       

Commodities

Gold hasn’t moved much today despite the dip in the greenback, and the drop in global stocks. The metal has enjoyed a bullish run in recent months and the fact that it has held onto most of it gains, suggests the bulls are still optimistic.

Oil have rallied today on talk that OPEC will look to trim production on the back of the slump that was endured earlier this week. The International Energy Agency have cut their demand outlook to the lowest level since the credit crisis. Global trade tensions and higher US inventories hit the oil market this week, and that gives major oil producers more incentive to cut output.      

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