market relief

Stocks are mixed heading into the close and volatility has been low this session as many traders are squaring up their positions ahead of Christmas. 

Europe

It has been a rough week for equities as investors are worried about the state of the global economy, but comments from John Williams, a US central banker, have eased concerns a little.

Vodafone are in the red after the company declared it is on the look-out for a new auditor to replace PWC. The move comes as the telecoms firms is locked in a legal battle with the accounting firm over the collapse of Phones4U. Vodafone should announce its new auditor in February. The Competition and Markets Authority recently suggested that major UK companies should have their accounts audited by at least two firms, and one of which should be outside the big four.

Interserve shares are lower after the firm announced a debt rescue plan. Investors will be subject to a ‘material dilution’ as the struggling group will convert a ‘sufficient amount’ of its senior debt into new ordinary shares. Adding to that, the firm has agreed to defer a debt payment from 1st February 2019 until 30th April 2019, and that should give the company some much needed breathing space. The sector has been under the cosh this year with the collapse of Carillion. Yesterday, Kier Group confirmed that only 38% of its shareholder took of the rights issue, which highlights how the poor sentiment.

Just Eat Group shares are higher today due to consolidation in the industry. Takeaway.com has agreed to buy a German business from Delivery Hero for €930 million. 

US

Stocks initially rallied this afternoon on the back of comments from New York Federal Reserve President John Williams. The policy marker said the central bank might reassess its plans to tighten monetary policy in the New Year, and the less hawkish suggestion, lifted investor confidence. The upward move didn’t last long though as the gains were quickly given up.

There was raft of economic updates today. Durable goods order in November jumped by 0.8% on a monthly basis, which undershot the consensus estimate of 1.6%, but was still a major improvement on the -4.3% decline in October. The report which strips out transportation declined by 0.3%, and economists were expecting 0.3% growth. The final reading of third-quarter GDP was 3.4%, which was a touch below the previous reading of 3.5%. The core PCE reading is the Fed’s preferred measure of inflation, and the annual reading in November edged up to 1.9% from 1.8%. The US central bank suggested it will hike rates twice in 2019, and if inflation is ticking up, they would be somewhat justified in tightening their monetary policy. 

Nike shares are higher after the company announced impressive second-quarter results. Earnings per share were 52 cents, which comfortably topped the 46 cents that analysts were expecting. Revenue was $9.37 billion while the consensus estimate was $9.18.

FX

EUR/USD is lower on the session thanks to the firmer US dollar. The greenback has recouped some of this week’s losses and the single currency is paying the price for it. It wasn’t the most interesting session for eurozone news today. French third-quarter GDP was 0.3%, slightly lower than the previous reading of 0.4%.

GBPUSD is largely unchanged on the day. The final reading of UK third-quarter GDP was 1.5% - in line with expectations. The pound still has Brexit hanging over it, and seeing as there won’t be a vote in parliament until the middle of January, sterling might be subdued for a few weeks.

Commodities

Goldis lower today due to the bounce back in the US dollar. Yesterday the metal hit a fresh five month high so a bit of pullback isn’t a surprise. Since mid-August, the trend has been to the upside, and if the bullish move continues it might target the $1,265 region. 

Oil has steadied today, but the market remains dogged by concerns about oversupply and potentially weaker demand. Lately there has been high correlation between oil and global equities as both are driven by perceptions about the health of the world economy.

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