The FTSE 100 is the standout performer in Europe thanks to the benchmark’s relatively high exposure to energy and mining stocks. 

Europe

Royal Dutch Shell and BP have helped the British index due to the rally in the underling oil market. Brent crude oil reached its highest level in four years as dealers are concerned about supply, and energy stocks are in high demand on the back of it. Eurozone stocks are mixed this afternoon after a small recovery from yesterday’s negative move, investors are still cautious about the US-China trade dispute.    

Next shares are higher today after the company upped its full-year guidance. The fashion house performed better than expected in August and early September due to the warm weather, and first-half profit fell by 0.5% to £311.1 million, while the consensus estimate was £315.3 million. During the period, profit at stores fell by 23%, while online profit increased by 21%. Consumer patterns are changing and store sales now account for less than half of total revenue at Next. The company could focus more on online sales given how the entire industry is heading. The group confirmed they are well prepared for a ‘no-deal Brexit’, and that has given shareholders some reassurance. The share price gapped higher today, and while its holds above the 200-day moving average at 5,289p, its outlook could be positive.

Glencore announced that it is expanding its share buyback scheme by $1 billion, and the timeline of the buyback will be extended until February 2019. Morgan Stanley lowered their target price to 390p, from 400p, but the share buyback scheme took precedence. 

It was reported that Amazonheld takeover talks with Deliveroo ,and this could put pressure on Just Eat. Last week, it was revealed that Uber and Deliveroo were in takeover discussions, and that sent the price of Just Eat lower, and the prospect of consolidation in the industry could hurt the stock.

BMW shares were driven lower by the company’s profit warning. The German manufacturer said revenue would be ‘slightly below’ 2017 levels, while the previous forecast was for an improvement on the 2017 level. The company cited higher costs associated with the tougher emissions standards as well as the trade uncertainty due to the US-China spat. 

US

Stocks are broadly unchanged as traders are getting used to the idea of a protracted trade dispute between the US and China. The Beijing authorities accused the Trump administration of bullying behaviour and said US’s aggressive trade tactics about hamper the global recovery.  Given the firm stances that both governments are taking, the trade dispute could drag on.

The Conference Board consumer confidence jumped to 138.4 – a fresh 18 year high. The August report was 134.7, and economists were expecting a reading of 132. The Richmond manufacturing index jumped to 29, up from 24 in August. The impressive economic indicators bode well for the US economy in light of the Federal Reserve meeting tomorrow.

FX

The continued weakness in the US dollar has helped the euro and the pound. The greenback is in the red after the Federal Reserve begin their two day meeting today. Tomorrow the Fed’s interest rate decision will be released, and traders are widely expecting an interest rate hike. The statement is likely to be the most important part of the update. There is talk the Fed will hike rates in December and that is what traders will be trying to decipher.

EUR/USD has been lifted by the dip in the US dollar. The German wholesale price index in August came in at 3.8%, and the July report was revised higher from 3.5% to 3.6%. The rise in prices for wholesalers could bring about higher inflation as costs are likely to be passed on to customers.

GBP/USD’s positive move today is largely down to the weakness in the US dollar. Sterling is making up some of the ground that was lost on Friday. Uncertainty hangs over the pound on account of Brexit, but while it remains above the 1.3000 mark its outlook could remain positive.

Commodities

Gold has ticked up on account of the slide in the US dollar. The metal continues to experience low volatility and that might remain the case until the Fed announce their interest rate decision and statement tomorrow. The gold market remains in a downward trend and while it stays below its 50-day moving average at $1,205 – the outlook might stay negative.

Oil remains strong as traders are fearful about future supply levels. Despite the plea from the US, OPEC will not be raising output, and when the US sanctions on Iran are implemented in November, supply will be. Brent crude hit a level not seen since late 2014, and that underlines how bullish the sentiment is.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.