European are looking to finish lower on the day as mid-morning gains have been handed back.
The FTSE 100, DAX and CAC 40 reached one week highs earlier today, but since then investors have been locking in their profits and now the FTSE 100 and DAX are in the red. The mood remains optimistic despite the small bit of selling we has seen lately. It would appears that we are slowly recovering from the major declines of last week.
Standard Life Aberdeen have taken a knock today after it was revealed that Lloyds owned Scottish Widows will be ending their agreement. It was been reported that approximately 5% of Standard Life Aberdeen’s revenue comes from the Scottish Widows deal, and now it is coming to an end. The timing could not have been worse for Standard Life Aberdeen as the stock lost ground during the recent heightened volatility. Asset managers across the board suffered as investors scrambled to take their cash out of investment products. The stock is down 8.6% and has fallen to a ten month low, and if the bearish move continues it could target 336p.
Shares in Oxford Biomedica received a boost today after the company announced a new deal with Bioverativ which could be worth up to $100 million. Shares in Oxford Biomedica jumped to their highest level since April 2016 today, and if the bullish move continues it could target 13.3p.
The Dow Jones and S&P 500 started off the day in positive territory but have since swung into the red. This week has been positive for investors and the dust has settled on last week’s stampede for the exit. The drop in the volatility index (VIX) is reassuring dealers that fears levels are falling.
There was more evidence that prices are ticking up in the US. The producer price index (PPI) jumped to 2.7% in January, and economists were expecting a reading of 2.5%, - 2.6% was the December figure. The slight rise in input costs for businesses matches the steady inflation rate of 2.1% that we saw yesterday. The Federal Reserve have an inflation target of 2%, and seeing as we are holding above that level we could further monetary tightening from the Fed. There is speculation we could see four interest rate hikes from the Fed this year.
Cisco Systems shares surged after the company issued a positive outlook. The company expects sales to increase 5% on last year’s figures which would put it at $12.5 billion, while analysts were forecasting $12.1 billion. The tech firm foresees ‘significant acceleration’ in the third-quarter. The stock gapped higher and hit a level not seen since the dot com ear, so the sentiment is clearly bullish. If the rally continues it could target $50.
The US dollar index is down for the fourth day in a row. The marginal increase in PPI in the US has little impact on the currency as traders are still fixated on yesterday’s disappointing retail sales. The recent slide in the US dollar will make the US Treasury Secretary Steven Mnuchin happy as he feel the drop in the currency will help exports.
EUR/USD has pushed higher on account of the weaker US dollar. Spanish inflation dropped fell to from 1.1% in December to 0.6% in January, and this is worrying as it points to falling demand. Broadly speaking, Spanish economic indicators have been robust, but the sudden fall in the cost of living tells us the economy isn’t firing on all cylinders.
GBP/USD hit a ten day high largely down to the slide in the US dollar. There has been increased speculation the Bank of England (BoE) will hike interest rates in May, and the bullish sentiment surrounding sterling along with a soft greenback is driving the currency pair higher.
Gold reached a three-week high this morning as the weakness in the US dollar is making the metal more attractive. Gold has drifted lower since the morning highs but has yet to handback any of the gains that were racked up yesterday. Lately the metal hasn’t the safe haven destination by investors, while there has been the strong inverse relationship between the commodity and the greenback.
WTI and Brent Crude oil have given up some of yesterday’s gains and the concerns about oversupply still persist. Yesterday the oil market surged as a smaller expected oil inventories report prompted short covering and bargain hunting, but now the turned lower again.
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.