market relief

Stock markets in Europe are experiencing low volatility as the US market is closed for Thanksgiving. 

Europe 

Investors in this part of the world are content to have a quiet day while their American counterparts have the day off. The FTSE and DAX are largely unchanged on the day as traders fail to muster up any serious interest.

The German political situation is still in limbo, but there is talk of Martin Schulz, of the Social Democratic Party, is willing to discuss the possibility of doing a deal with the Christian Democratic Union (CDU), which is headed by Angela Merkel. Some political stability would be welcomed in Europe’s largest economy, but it isn’t essential as the region is ticking along nicely.    

Centrica announced that it lost 823,000 customers in four months, thanks to a decision to hike prices. The energy provider stated that full-year earnings will be 12.5% below the previous forecast. The update sent the stock tumbling by 15%, and that fits in with the wider down trend it has been in since the summer of 2013. Centrica’s share price fell to a level not seen since 2003, which indicates how bearish the sentiment surrounding the stock is.  

Mitchells and Butlers shares are down 6.8% after the company revealed it will not be paying an interim dividend next year, and that full-year profits missed analysts’ estimates. Higher costs in relation to wages and adverse currency movements hit the bottom-line. The decision to conserve cash by holding off paying an interim dividend next year spooked the market. A cash return is highly valued by some investors, and some a dividend being pulled, and think the company is in trouble.

US

The New York Stock Exchange (NYSE) is closed today as the US celebrates Thanksgiving.

FX

EUR/USD is in positive territory today and the strong economic indicators out of the eurozone underpinned the move higher. The French purchasing manager’s index (PMI) report for November came in at 60.2, which was a major improvement on the October reading of 57.4. Today’s reading was the highest since May 2011. Germany’s manufacturing PMI report soared to 62.5 from 60.5 in October. Germany hasn’t seen a manufacturing reading that high in over nine years.

GBP/USD is slightly lower on the day as profit taking as set in. The pound has had a good run versus the US dollar recently and today we are seeing a bit of a pullback. On an annual basis the UK economy grew by 1.5% in the third quarter, meeting estimates, but it was a slower growth rate that the previous reading of 1.7%. Sterling has been making headway against the US dollar since March, and it is likely to continue.

Commodities

Gold is has nudged up again and the metal has traded through the $1290 mark .Over the past month gold has created a series of higher lows, but it hasn’t had any major moves to the upside. The softness in the US dollar is assisting the metal yet again. As December nears traders could get tetchy ahead of the Federal Reserve’s meeting in the middle of the month, as a rate hike is expected, and the press conference will be closely watched.

WTI and Brent Crude oil are higher on the session as we are one week out from the ae OPEC meeting in Vienna, and there is talk the group will look to extend the coordinated production cut to the end of 2018. Saudi Arabia is keen to extend the cut, but the country also has a history of not fulfilling its promises.

The energy market is strong as Brent Crude is still above its 200-week moving average at $62.26, and WTI hit its 200 week moving at $58.18 – it hasn’t hit that metric since August 2014.

 

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