market relief

Stocks are higher as improved political relations in Germany and constructive trade comments from China has lifted investor sentiment. 

Europe

Angela Merkel has brokered a deal with Horst Seehofer which will keep their alliance intact. The positive mood might not last long though, as the Social Democrats need to inspect the agreement. An official from the People’s Bank of China announced they will not use the yuan as a tool in the trade spat with the US, and traders are taking this as a step in the right direct for global trading relations.

International Consolidated Airlines Group received a boost after Credit Suisse increased its price target for the stock to 895p, up from 721p. The share price hit an all-time high last week, and today’s update from the Swiss bank has added to the bullish sentiment.

Glencore shares are in the red after the US Department of Justice (DoJ) requested information from the company regarding its businesses in Nigeria, Venezuela and the Democratic Republic of Congo. The documents requested stretch back to 2007. The update was light on details, but the records are connected with the Foreign Corrupt Practices Act and US money laundering statues. The stock fell to a one-year low on the back of the update.  

McBride shares have taken a knock after the company issued a profit warning, it’s second in 2018. The firm revealed that full-year adjusted pre-tax profit will be marginally below the lower end of equity analysts’ estimates. The firm now predicts that total second-half revenue will be 15.8% higher than the same period last year. McBride will sell its care liquids business to Royal Sanders for £12.5 million. The share price has been in decline since December 2017, and if the negative trend continues it could target 100p.

US

Equity markets are largely higher this afternoon as traders are less fearful about the prospect of a trade war with China. A Chinese central bank official said they will not use the yuan as a tool in the trade conflict, and traders are viewing this as a sign that China aren’t interested in provoking Washington DC. On Friday, the US will begin imposing tariffs on $34 billion worth of industrial imports from China. The conciliatory language from Beijing today has prompted traders to snap up stocks.

Factory orders increased by 0.4% in May, while economists were expecting zero growth. The April report was revised from -0.8% to -0.4%. The update adds weight to the argument that the US economy is ticking along nicely.

Alphabet shares are lower as traders are fearful that Google is in line for a sizeable fine from the EU for anti-competitive practices. The announcement of the fine could come on or around 18 July.

FX

GBP/USD is higher on account of the weaker US dollar and the solid construction data from the UK. In June, the UK construction PMI report jumped to 53.1, up from 52.5 in April. The consensus estimate was for 52.5. Today’s reading was the highest since December 2017, and it is fair to say the sector has bounced back since Carillion’s collapse in January. The pound has lost ground versus the US dollar since April, and if the bearish trend continues it could target 1.3000.

EUR/USD has been assisted by the pullback in the greenback. The eurozone revealed mixed economic updates this morning: PPI showed a 0.8% increase in prices in May, which comfortably topped the consensus estimate of 0.4%. This jump in PPI could be a sign of higher CPI down the line. Retail sales in the currency bloc were flat on the month, while economists were expecting growth of 0.1%.

Commodities

Gold fell to a fresh six-month low this morning, but has since recouped some of the lost ground. The metal has been in decline since April, and if it falls below the December low of $1,236, it would pave the way for further losses. On Thursday, the Federal Reserve will release the minutes from the latest meeting, and dealers will be trying to ascertain how hawkish the US central bank will be in the second-half the year.

WTI and Brent Crude are higher today after Libya and Canada stated that output levels were hit. The oil market has been rising recently and the latest supply concerns have driven up prices again. WTI traded above $75.00, a level not seen since November 2014. It was reported by Al Jazeera that Saudi Arabia are going to increase output in a bid to keep President Trump on side, and this has triggered some profit-taking on oil. 

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