News

Bullish equity run continues, NMC Health tumbles again

European equity markets are set to finish the week on a positive note. 

Europe

The FTSE 100 hit its highest level since early August, and the CAC 40 registered a new 12-year high. This day last week it was announced that the US and China agreed on the terms of the first phase of the trade agreement, and the bulls are still dining out on that news. The likes of the FTSE 100 and the DAX have underperformed when compared with the US indices, and it could be the case that traders are seeking out bargains       

Royal Dutch Shell shares are lower after the company said it expects to take a hit of up to $2.3 billion in relation to an impairment. The firm also lowered its expectations for capital expenditure to the lower end of the $24-$29 billion range. The movement in the stock hasn’t been that big seeing as the company cautioned about it in its latest quarterly update – where it said it would miss targets in relation to increasing shareholder returns and debt reduction. Perhaps today’s news will get management to rethink its generous investor returns scheme seeing as it has a high level of debt.         

NMC Health shares have lost major ground as traders are still petrified the company has unsound accounting practices. Earlier in the week, a report circulated that shed major doubts about the company’s financial health. The company has since described the report as ‘false and misleading. NMC have stated the media article claiming the company needs to raise €200 million in off-balance sheet debt is based on inaccurate information. The toing and froing about the group’s financial stability has battered the stock price, and traders are likely to avoid the stock while the doubt remains.      

US

It has been another impressive day for US stocks on the back of the trade sentiment, plus the economic reports helped too. The final reading of third-quarter GDP was 2.1%, in line with expectations, and it was unchanged from the initial reading. The US economy grew at a quicker rate in the third-quarter than in the second, and we are yet to see the full effect of the three rate cuts that took place between June, and October. Core PCE held steady at 1.6%, while personal income and spending grew by 0.5% and 0.4% respectively. Keep in mind, yesterday the Fed’s James Bullard said he doesn’t see the need to change rates in 2020.  

Nike posted solid second-quarter figures last night. EPS was 70 cents, which smashed the 58 cents forecast. Revenue increased by $10.33 billion, and the consensus estimate was $10.09 billion. The company is adapting to the changes in consumer trends as digital sales surged by 38%. China continues to be a big money spinner for the group as sales jumped by 23%, marginally topping forecasts.

Blackberry shares are higher this afternoon on the back of better-than-expected results. EPS were 3 cents, and traders were expecting 2 cents. Revenue for the period increased by 23% to $280 million, which topped the $275.7 million forecast.      

FX

GBP/USD is slightly higher today on the back of the respectable growth figures from the UK. The final reading of third-quarter GDP showed the economy grew by 0.4% on a quarterly basis, and that was an upward revision from the 0.3% initially predicted.     

A broad rebound in the US dollar has hit EUR/USD. The German GfK consumer sentiment reading edged lower to 9.6 from 9.7. The Italian PPI reading improved from -2.9% to -2.5%. It has been a dull day for eurozone economic indicators.

Commodities

Gold is in the red thanks to the rise in the US dollar. Traditionally there has been an inverse relationship between the two markets, and that is playing out today. Over the past few trading sessions the metal has been trying to crack the $1,480 mark. The rally in US stocks suggests that traders are in risk-on mode, which is why there is less appetite for the metal.  

Oil has retreated on profit taking. WTI as well as Brent crude recently hit a three month highs on the back of the US-China trade story. There were no major reports suggesting that demand is weak or that supply is excessive, and it just seems the bullish run has faded.   

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