market relief

Stock markets are in the red today as traders remain cautious about the state of the European economy. 

Europe

The dreadful manufacturing figures from France and Germany, from Friday, are still playing on traders’ minds. The poor economic reports from the two largest economies in the eurozone acted as a wakeup call to investors, that a no-deal Brexit is likely to be painful for the Continent as well as the UK.

Inmarsat shares jumped after it was announced that the firm has been approached by a consortium of investors. The group of investors are offering to pay 546p per share and Inmarsat’s board described the deal as ‘fair and reasonable’ and they have signalled their approval of the deal.  

John Wood Group shares are in the red after Jefferies downgraded the stock from ‘hold’ to ‘underperform’, and the bank cut its price target to 480p from 550p. The oil services company is planning to sell-off non-core assets, and pay down debt, but Jefferies warned that there might be ‘dividend risk’ if the asset sales don’t go according to plan.

United Utilities shares’ are in the red after Deutsche Bank lowered its rating to ‘hold’ from ‘buy’. The bank noted that the stock has performed well since early October – when it issued a positive rating for the company’, but now feels the company is no longer ‘clearly undervalued’.

Lonmin shares are higher this afternoon despite the company confirming it doesn’t have the liquidity it require to funs new operations. The struggling miner is in the process of being taken over by Sibanye. Lonmin has made confirmed it has made over 8,000 job cuts as a part of trimming down the business.

US

After a shaky start, the major US indices are now just about back in positive territory. The inversion of the US bond yield curve on Friday spooked investors are it is deemed to be a reliable indicator of a recession. The US economy is in good shape, but some of the economic reports would suggest it is in for lower growth. The very talk of a recession has damaged investment sentiment, and some individuals or companies might alter their behaviour, which might speed up the economic cooling.  

Apple will be in focus today as the company will host an event where it will promote its news service and TV streaming service. The company will be playing catch-up given the popularity of Netflix and Amazon Prime. Some investors think we have reached peak iPhone, and Apple will be need to start drawing in a higher portion of its revenue from the services department. The event will take place at 5pm (UK time).

FX

EUR/USD recovered from the sharp sell-off on Friday. The German Ifo business climate ticked up to 99.7, which topped the forecast of 98.7. The February report was revised from 98.5 to 98.7. Traders welcomed today’s report, especially in light of the dreadful manufacturing numbers that were revealed on Friday. It is worth remembering that the February Ifo report was the weakest since early 2010. 

GBP/USD is higher today as the pullback in the greenback has lifted the pound. The Confederation of British Industry carried out a survey of the financial services sector and sentiment is cautious to say the least. Optimism in the industry dropped at its fastest rate since the financial crisis.

Commodities

Goldhas been lifted by the slip in the US dollar. The metal’s inverse relationship with the greenback continues and that is playing out today. Gold has also been helped by the nervousness in equity markets, as some traders are seeking out safe haven assets. The metal has been in an upward trend since mid-November, and should the bullish move continue it might target the $1,346 region.

Oil is in the red as investors are worried about the state of the global economy. Disappointing manufacturing PMI reports from a number major economy economies at the back end of last week, combined with chatter of a recession in the US has encouraged dealers to dump oil.

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