Stock markets in Europe are in the red as trade worries linger. 

Europe

The trading relationship between the US and China still has a long way to go, and dealers are a little nervous that tensions could flare up again. During the week, President Trump issued a dig at China and waned that tariffs could be slapped on $325 billion worth of goods.    

easyJet issued a solid third-quarter update as passenger numbers increased by 8%, and revenue increased by 11.4%. The respectable numbers prompted the airline to state that it would hit its full-year pre-tax profit target of £423 million, and going into today, some traders were expecting the group to guide towards to £400 million. The stock is higher on the session.

ASOS shares sold-off aggressively today after the group issued its third profit warning in seven months. The company said that full-year pre-tax profit will be between £30 million and £35 million, while the consensus was for £55 million. Problems at two warehouses caused costs to be higher than previously predicted. Total sales in the four month period increased by 12% so demand is still respectable.   

SAP dropped as the company posted an 11% increase in second-quarter operating profit, but traders were expecting a jump of 14%. The operating margin held steady at 27.3%, but the consensus estimate was 27.7%. The group cautioned that the trade war between the US and China was impacting the business. The stock hit an all-time high earlier this month, and if it can hold above the €110.00 region, the wider bullish trend should continue.

US

The major US indices are in the red this afternoon as trade concerns linger. The negative sentiment that was doing the rounds yesterday is still hanging over the markets, and traders are still worried about the trade spat with China. The jobless claims report came in at 216,000, and that was in line with forecasts. The Philly Fed manufacturing index jumped to 21.8 in July, from 0.3 in June, and the reading was the highest since October last year. The update is unlikely to silence all those traders calling for a rate cut from the Fed, but it shows that some aspects of the US economy are performing well.     

Netflix shares slumped after the company revealed disappointing quarterly figures. Ahead of the results, traders were expecting the company to add 352,000 domestic new subscribers, but they actually declined by 126,000, and the firm added 2.83 million new international clients, but the consensus estimate was 4.81 million. There are concerns the streaming market has become more competitive, and there were concerns the content wasn’t as good. The company is optimistic about the third-quarter as it will include the latest season of the extremely popular show Stranger Things ,and a new season of Orange is the new Black, and The Crown are in the pipeline too. Netflix share are up 21% year-to-date, despite today’s drop.

ebay shares are in demand after the group posted solid figures after the close after night. EPS increased by 28% to 68 cents, and exceeded the consensus estimate of 62 cents. Revenue ticked higher by 2% to $2.69, and equity analysts were expecting $2.68. The company has been under pressure from activist investors like Elliot Management and Starboard Value to break-up the group, and yesterday eBay confirmed they are considering selling-off the Classifieds business and Stubhub. The tech firm bought a 5.5% stake in India’s Paytm Mall, and the group wants to take advantage of the growing online retail market in India. The outlook for the third-quarter outlook is optimistic as the group expects EPS to be in the region of 62 cents and 65 cents, and the consensus estimate is 63 cents.              

FX

EUR/USD lost a little ground as the European Central Bank (ECB) said it would reassess its inflation target. The CPI rate is currently 1.3%, and the current target is 2%, and given that that cost of living has been subdued, the ECB are likely to lowering their target. The ECB will release their interest rate decision next week ,and seeing as the Fed were tipped to cut rates later this month, the euro is likely to come under pressure.

GBP/USD was given boost by the from the EU’s Michel Barnier, who said that alternative solution to the issue of the Irish border issue might be operable. Traders reacted well to the news as it give some hope that a no-deal Brexit will can be avoided. The stellar UK retail sales added to the pounds positive move too. In June, UK retail sales jumped by 1%, while traders were expecting a decline of 0.3%, and it was welcome change from the -0.6% fall in May.   

Commodities

Gold is in the red as traders are taking a bit of profit on yesterdays positive move . The metal has been broadly trading in a range in the past few weeks, and a break above the $1,439, might pave the way for $1,485 to be targeted.

Oil has dropped sharply despite the sharp rise in tensions in relation to Iran. The Iranian regime seized a foreign oil tanker in the Strait of Hormuz. To a lesser extent, the trade woes are a factor too, as worries about the global economy could lead to weaker demand.       

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