Stock markets are in the red following yesterday’s bullish move. 

Europe 

Fears regarding, US-China trade, Italy’s budget and Brexit all play into the mix. President Trump warned that that levy on Chinese imports might be increased, and further tariffs could be announced. This dampened investors’ hopes about a deal being struck at the G20 summit.

Thomas Cook Group shares slumped after the group issued its second profit warning in two months. In September, the group warned that full-year profit would be in the region of £280 million, and that compared with the previous guidance of £323 million, and now they are expecting earnings to be £250 million. The unusually warm weather over the summer encouraged people to stay at home, and that hurt the business. Industrial action in Europe and higher oil prices over the summer added to the sectors woes. The CEO, Peter Frankhauser, cited a ‘legacy and non-recurring charges’ for the downgrade of the profit guidance. Investors will be listening out for more details on Thursday, when the company will announce full-year figures. The firm suspended the dividend and that also underlines how much the firm is struggling. The stock has been in decline since May, and if the bearish move continues it could target 30p.

Greggs shares hit a record-high today after the company confirmed that full-year profit will be at least £86 million, and that is an improvement on the previous guidance, which was in the region of £ 81.2 million. Total sales in the eight weeks until late November jumped by 8.2%, while like-for-like sales of managed stores increased by 4.5%. The group said that ‘operational costs have been well controlled’ and that assisted with the strong performance. The share price has rallied approximately 46% since July, and if the bullish move continues it could target 1,500p.   

Intertek shares are higher today after the company announced they are on track to deliver their 2018 targets. Group revenue for the first ten months of the year jumped by 4.8%. The products division saw organic revenue growth of 6.1%, while the trade sector level registered 2.8% growth. The stock has been edging up since mid-October, and if it holds above 4,650p – 50-day moving average, it might retest 5,000p.

NMC Health shares are in the red after Jefferies downgraded the stock from hold to underperform, and cut the price target to 2,940p, from 3,411p.

US

The major indices are lower as dealers are worried about the state of US-China trading relations. The comments from Mr Trump in relation to trade with China has put pressure on stocks, and dealers are less hopeful now that a deal will be reached with Beijing. Cyber Monday registered a record of $7.9 billion worth of sales – according to Adobe Analytics. Macy’s, Target and Best Buy are higher despite the wider decline. 

Federal Reserve deputy Chairman, Richard Clarida, reiterated his view that interest rates are ‘much closer’ to the neutral rate than initially thought. The central banker feels there should be a ‘gradual’ approach and that any further monetary tightening should be ‘data dependent’. It seems that Mr Clarida is keen to take a more relaxed approach to hiking rates, and that is likely to be positive for equity markets, as the recent sell-off was partially driven by the fear that there would be three rate hikes in 209.

The Case Schiller house price index showed annual growth of 5.3% in November, which topped the forecast of 5.1%, but the October report showed 5.5% growth - so the rate is cooling. 

FX

The US dollar index is higher today, and it hasn’t moved much in the wake of the comments from Richard Clarida of the Federal Reserve. The greenback has been pushing higher since late September, and that the Fed is widely expected to hike rates next month, and we are likely to see the positive trend continue.

In terms of economic indicators, it has been a quiet day in the eurozone. Italian consumer confidence cooled to 114.8 in November, down from 116.6 in October. The economic indicators from Italy have been weak recently, so it’s no surprise that consumer’s optimism has waned. EUR/USD is lower on the day.

GBP/USD is under pressure as MPs are voicing their opposition for the deal that Theresa May has agreed. The DUP, who are propping up the Conservatives at Westminster have made it clear they won’t support it. Former defence secretary, Michael Fallon, said it was ‘doomed. The chances of a ‘no-deal’ Brexit have increased as there is speculation that the deal will be voted down, and that is weighing on the pound. 

Commodities

Gold is a touch lower today due to the firmer US dollar. The inverse relationship between the greenback and the metal continues to be strong. Gold has been trading in a small range recently, and if it can hold above the $1,200 mark, its outlook is likely to be positive.

Oil prices are largely unchanged today as traders remained concerned about oversupply and the trading relationship between the US and China. Saudi Arabian production reached a record high, and tensions are rising between the US and China in relation to trade, and dealers are cautious that demand might drop too. Counteracting the negative news, is the chatter than OPEC are tipped to announce a production cut next week.

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