European equity markets are set to finish on positive note as confidence is creeping back in to the stock markets. 

Europe

The 100 and CAC 40 managed to print levels not seen in over a week, which underlines the rise in market confidence. Some traders are cautious as the memories of last week’s sell-off in still fresh in their money, while others are picking up relatively cheap stocks.

Segro posted a 26% rise in adjusted profits. The company which specialises in industrial property saw group rental income rise by 2.6%. The UK outperformed Continental Europe in terms of rental income. Segro owns a portfolio of warehouses around Europe that are worth approximately £8 billion. The company is taking advantage of the increase in online spending, and it has driven up the need to warehouses that are near well connected transport links. The share price hit a nine year high today, and if the bullish run continues it could target 600p.

Balfour Beatty shares are up 2.3% as the company is a part of a joint venture that won a $1.95 billion contract at LA international airport. The project will involving building and operating an ‘above ground airport transport system’ at the airport. The fact the company nearly went to the wall a few years ago, and is now landing major overseas contracts, goes to show how successful the turnaround was.

US

US markets are positive as traders enter the session with some enthusiasm This week has seen the recovery kick in, and by and large it has returned some confidence to the equity markets. The Dow Jones and the S&P 500 are above their respective 50-day moving averages – which is a positive sign.

The yield on the 10-year government bond has been edging higher too, which suggests the bond market are pricing in more interest rate hikes, possibly four this year from the Federal Reserve.

The US continues to produces solid economic indicators, which adds to the argument the Fed could hike four times this year. In January, housing starts were 1.32 million and building permits were 1.39 million, and the consensus was for 1.23 million and 1.3 million respectively.

FX

The US dollar is still very volatile as the currency dropped to its lowest level in three years this morning, and now has bounced back. It was helped along by the robust housing data in the US. The push higher we witnessed in the past few hours could be short covering, as the wider trend is still bearish.

GBP/USD has been dragged lower by the disappointing UK retail sales figures and the firmer US dollar. In January, UK retail sales grew by 0.1%, while economists were anticipating growth of 0.5%, and the December report saw a 1.5% jump. The less than impressive figures started the ball rolling on the decline in the pound, and the rally in the greenback made matters worse for sterling.

EUR/USD hit a new three-year high this morning, but has since swung into the red as the push higher in the US dollar has weighed on the single currency. German wholesale price index (WPI) jumped to 2%, up from 1.8% in December. The ticker hit in wholesaler costs could trickle down to the headline line inflation, which has been relatively low recently. The dominance of the US dollar has been the main driver of the move today.

Commodities

Gold notched up another three week high today, but has lost some ground as the stronger US dollar encouraged traders to lock in their profits. The commodity has been in a strong upward trend since December, and the metal could target the 2018 high of 1366.

WTI and Brent Crude oil have been drifting this afternoon as traders are still concerned about over-supply. The energy market has been drifting lower since the end of January and now the US is producing oil at a record level, dealers are fearful of over-supply.

At 6pm (UK time) the Baker Hughes rig count will be revealed, and the consensus is for 764, and that compares with the previous reading of 791.

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