Stocks are in the red today as President Trump is under political pressure at home.
The Democrats are pushing to impeach Mr Trump over the admission that he applied pressure to the president of Ukraine to investigate the Biden family – Joe Biden is running again Mr Trump in the 2020 US presidential election. In 2017 there was talk of impeachment, which obviously didn’t happened, but there was a ripple out effect in global stock markets, as traders despise political uncertainty.
Yesterday President Trump reminded the world he wouldn’t accept a ‘bad’ trade deal from China, while Beijing has made it clear they wanted the US to ‘remove all unreasonable restrictions’. The tone of the trade dispute has hardened a little, which is part of the reason that stocks are lower too. The two sides are due to meet next month, and traders aren’t overly optimistic about a deal being brokered.
Sainsbury’s are shaking things up in terms of its stores. The group is planning to close down undeforming stores, as well as open new ones in more desirable locations. Sainsbury’s intends to close 30-40 convenience stores, while at the same time, it will open 110 new outlets. As far as Argos goes, 80 news stores will be added but between 60 and 70 shops will be closed. Sainsbury’s, like its peers has had to restructure itself, so traders are viewing this as a positive step. The outlet closures will the company £230 million - £270 million, but on the bright side, the firm now aims to reduce debt over the next three years by at least £750 million, while the previous target was £600 million. The sales numbers were underwhelming, as in the second-quarter, like-for-like sales excluding fuel dropped by 0.2%. The mediocre revenue numbers are probably why the supermarket will undergo a restructuring plan.
Boohoo are continuing to be power ahead in the in fashion sector. The retailer had an ‘outstanding’ performance as revenue in the first-half surged by 43% to £565 million, topping forecasts. Earnings for the time period increased by 53% to £60.7 million, which also exceeded expectations. Lately we have seen clothing companies struggle due to high street costs. combined with a cautious consumer climate. Boohoo is an online fashion, and it is cleaning up as lower prices, in addition to popular brands are helping the group. The firm continues to expand overseas as international revenue now accounts for over 40% of total revenue.
Aston Martin confirmed it raised $150 million via bond issue, and it said it has the option to raise another $100 million if needed. The move comes as there were questions over the health of the group’s finances, but today’s update should have stem the worries. The stock is in down 4%.
US
Equities are lower as domestic politics in addition to the trade tensions with China are hurting stocks. Mr Trump has seen off impeachment attempts, but the very mention of the word, has rattled traders. This political storm has the potential to hang over the White House for some time, so traders are taking cover, and exiting the equity markets.
The merger talks between Philip Morris and Altria have been called off. Altria spun off Philip Morris in 2008, and last month it was announced the two sides were considering reuniting. The two firms will work together in launching a product called IQOS - a heated tobacco product, in the US. IQOS is the only heat’sed tobacco product to have premarket authorisation from the FDA in the US, and that should stand to the company. Both stocks are higher today.
Judging by the quarterly update last night, Nike, are clearly in fashion. Total revenue in the three month period increased by 7%, while the North American division saw sales tick up by 4%. China is an ever increasing market for Nike, and sales jumped by 22%. The US-China trade spat has rumbled on for over one year, but it doesn’t seem to have hurt Nike yet, but new tariffs kicked in at the start of this month so traders will be closely watching the next quarterly update.
FX
The Punch and Judy show of the House of Commons returned today, and the booming voice of Geoffrey Cox, the Attorney General, taunted the Labour MPs about calling for a general election. Mr Cox claimed Prime Minister Johnson could be calling for a general election ‘shortly’ but at the moment Jeremey Corbyn doesn’t want to call for an election, probably because he has seen the opinion polls, and doesn’t think he can win. The renewed political uncertainty in the UK has weighed on GBP/USD.
EUR/USD is in the red as the broader push higher in the greenback has hit the euro. French consumer sentiment ticked up in September to 104, from 102. Admittedly, the move isn’t massive but it is a nice change for the disappointing services and manufacturing data from France earlier in the week.
Commodities
Gold is in the red on account of the firmer US dollar. Recently, there has been a strong inverse relationship between the metal and the greenback, and today that is playing out. The risk-off attitude of traders would normally lift gold, but today the rally in the greenback has taken precedence.
Oil is in the red this afternoon as Saudi Arabia is getting its oil production back to normal quicker than expected. Traders are no longer fearful about the supply side as the Saudi’s are making good progress in relation to the repairs. The slight increase in US-China trade tensions is a factor in oil’s decline to.
Disclaimer: CMC Markets is an order execution-only service. 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. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
