European stock markets are largely higher on the day heading into the close. 

Europe

The absence of further trade tensions between the US and China has prompted the bout of buying. Yesterday, Beijing made it clear they won’t be striking back at the US in terms of tariffs, and some dealers are taking the view the US then has no need to ramp up tensions. The two sides are due to meet to discuss trade next month, and there is a feeling we are approaching September on an optimistic note.

The FTSEMIB has been hit by the political unease in Italy. Recently there was hopes the Five Star Movement and the Democratic Party could form a coalition, and now there are doubts being cast over that possibility, so the prospect of a new election might be a reality.    

Grafton Group shares are in demand after the company posted solid first-half numbers. For the six month period, operating profit and revenue increased by 6% and 2% respectively. The Irish company said it saw ‘good’ domestic growth, and the Dutch and British operations are performing well too. The Irish division has a ‘positive’ outlook. The strong housing markets in Ireland, the UK and the Netherlands have helped in relation to the home improvements industry, although there are concerns about a housing bubble in all those regions.

Premier Foods announced a management change today. Alex Whitehouse has been named as CEO, and previously ran the UK operation. Colin Day has will take up the role as non-executive chairman, and Mr Day was previously the CFO at Reckitt Benckiser. The group has been plodding along for years, and the share price has been range bound, and the change in management could spark a change in change in investor sentiment.                  

US

Stock markets in the US are higher again today as traders are less fearful about the US-China trade situation. The trade spat is far from fixed, but given China’s declaration that they will not retaliate, there is a sense of optimism ahead of the trade talks that will be held next month. There was some mixed economic reports from the US today. The core PCE rate held steady at 1.6%, personal income dropped to 0.1%, while personal consumption came in at 0.6%. The high consumption rate to the income level suggests that consumers might be borrowing too much, and if that is the case, it is likely to catch up with them.                           

Dell shares got off to a strong start today after the company posted solid second-quarter figures last night after the closing bell. EPS were $2.15, and smashed the $1.47 forecast. Revenue for the period was $23.45 billion, and that was slightly higher than the forecast. The group derives the bulk of its revenue in the commercial PC space, and the unit saw a 12% jump in revenue, so it is performing well in the largest area of the business.

Tesla confirmed it will be exempt from China’s 10% auto sales tax, and the stock is higher on the back of the news. In July, the firm said that sales in China for the three months until late June jumped by over 30% on an annual basis, so the exemption shouldn’t hinder their growth.      

FX

USD/CAD is now largely unchanged, but it sold-off sharply on the back of the solid Canadian GDP update. The annualised GDP report showed the economy grew by 3.7% in the second-quarter, which is an impressive rate, and it topped the 3% forecast.

EUR/USD is lower on the day due to the underwhelming eurozone inflation figures. The headline CPI rate remained at 1%, and that met economists’ forecasts, and the core level hold steady too at 0.9%, but traders were expecting it to come in at 1%. The reports point to lacklustre demand in the eurozone, and there is likely to be increased calls for the ECB to cut interest rates next month.

Commodities

Gold is holding its own today. It says a lot about the strength of gold as it is largely unchanged on a day when risk-on sentiment is high, and traders are buying into equity markets. On Monday, the stock hit a fresh six year high, and as long as the metal holds above the $1,500 mark, the wider bullish trend should continue.

Oil markets have rolled over today after gains were made earlier in the week. Trade tensions between the US and China have cooled, but concerns still persist about the health of the global economy. Oil is seen as a good barometer for the health of the global economy, and reservations still exist.   

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