market relief

European equity markets have experienced low volatility today on account of the US market being closed. 

Europe

US-China trade talks will continue this week and there is a continued sense of optimism. It is a similar story to last week, whereby, the fact that negotiations are still ongoing are seen as a step in the right direction. Francois Villeroy de Galhau, of the European Central Bank, said the next move in terms of an interest rate change will depend on the economic data. The latest reports from the eurozone would suggest the region is going through an economic downturn, so traders are more likely to expect monetary policy to loosen, rather than to tighten.

Reckitt Benckiser shares has rallied today after the company announced solid results. Full-year revenue ticked up 3% to £12.6 billion. The company confirmed that fourth-quarter like-for-like (LFL) sales grew by 4%, which topped the consensus estimate of 3.3%. The firm foresees ‘broadly flat’ operating margins, and LFL sales are anticipated to see 3-4% growth. CEO Rakesh Kapoor, revealed plans to step down by the end of the year. His decision to devote more attention to higher-margin healthcare goods has stood to the group, and there is still speculation the company will split into two groups – one healthcare, and one that focuses on hygiene and home products.

Pearson announced it will sell K12 Courseware business to Nexus Capital Management for $250 million. K12, is the US schools course materials business and Pearson will receive $25 million up front, and the balance will be collected over the next three to seven years. The move will free up cash, and it will allow Pearson the opportunity to increase its presence in the expanding digital sector. The stock has been rising since October, and if it holds above the 890p region, it might target 1,000p.

Norwegian Air shares are in the red after a group comprising of the CEO, the Chairman, and their families, announced plans to sell some of their subscription rights to a share issue at a discount. The aim is to attract additional funds for the struggling company. In other airline news, Flybmi have collapsed, and the firm blamed higher costs and Brexit uncertainty for the demise of the company. Shares of BA’s parent company, International Airline Group have been dragged lower on negative news in the sector. 

US

US equity markets are closed today as the country celebrates Presidents Day.

FX

The US dollar index has drifted lower today as the currency has handed back some of the ground it made last week. The greenback has enjoyed relative strength recently as other central banks around the world have outflanked it in terms of dovish language.

EUR/USD has been helped by the dip in the US dollar. It has been a quiet day in terms economic announcements from the currency bloc. The single currency has rebounded today, but dealers are mindful if the region continues to produce poor economic indicators, a new round of targeted liquidity might be launched.

GBP/USD has edged up slightly despite the poor house price data from the UK. According to Rightmove, house prices increased by 0.2% on an annual basis in February, and that was the smallest growth rate since 2009. The news that seven Labour Party MPs resigned and formed their own group has fractured British politics even more so, but it has done little to the pound. 

Commodities

Gold has moved slightly higher today, and it managed to reach a level not seen since April last year. The dip in the US dollar has helped the commodity print a fresh multi-month high. Gold has been pushing higher for over three months, and if the upward move continues, it might target $1,335. 

Oil hit its highest level since November today, but the energy has slide a little since. The production cuts from OPEC that came into effect this year have propelled the commodity higher. Oil had a strong finish to last week, but volatility has been low today on account of the US holiday.

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