Stock markets are mixed as trade talks still dominate the headlines.

Europe

Chinese delegates are set to meet US representatives today to discuss trade. The meeting will hopefully lay the groundwork for a meeting between President Trump and China's Xi Jinping November. European car makers are lower after Mr Trump threatened to impose a 25% tariffs on EU cars that are imported into the US. The announcement from the US president last night is a reminder to the markets as to how unpredictable he can behave.   

Costain shares are in the demand after the firm had a strong start to the year. Pre-tax profit jumped by 24% thanks to a ‘higher quality’ order book. The group confirmed that 90% of their work is repeat business, which suggests customer loyalty, and it already has £1.4 billion of future revenue secured for the full year. The interim dividend was boosted by 8%, and this underlined the company’s confidence in future earnings potential. The stock has been broadly trading lower since May, but if it can hold above the 420p, its outlook could be positive.

Grafton shares are higher today after the company posted strong first-half results. Revenue grew by 9% to £1.44 billion, while adjusted profits rose by 19% to £90 million – topping analysts’ forecasts of £82 million. Operations in Ireland and Belgium performed ‘well’, while the British division ‘strengthened’. The interim dividend was increased by 14%, and the group confirmed it is on track to achieve its forecasts. The stock has been range bound recently, and a break above 825p could pave the way for 850p to be tested.     

John Wood shares received a boost today after Barclays raised the target price for the stock from 690p to 750p. The move comes one day after the oil services firm revealed respectable first-half numbers. The share price hit is highest level in nearly 15 months, and that underlines how bullish sentiment is.

US

Stocks are mixed after the S&P 500 and Russel 2000 hit all-time highs last night. President Trump is caught up in a political storm, and there is chatter of impeachment, but the likelihood of that happening is small. Paul Manafort, Trump’s former campaign boss, was found guilty of a number of felonies, including bank and tax fraud. Michael Cohen was Trump’s personal lawyer, and he has pleaded guilty to a number of different felonies including campaign finance violations. Mr Cohen testified that My Trump instructed him to break the law in 2016, and that is what is playing on trader’s minds.

The Federal Reserve will release the minutes from the latest meeting at 7pm (UK time). The update will give us an indication of how optimistic the US central is on the economy. Dealers are anticipating a hawkish announcement, and there is still a lot of speculation the Fed could hike rates in September and December.  

Target shares hit an all-time high after the company announced strong second-quarter results. Earnings per share, revenue and same-store-sales all topped forecasts. In fact, the same-store-sales growth were the highest in 13 years. The company has ambitious plans to beef up its e-commerce platform.   

Existing home sales in July dropped to 5.34 million, down from 5.38 million in June, and economists were expecting 5.4 million.

FX

The US dollar index has slipped again as traders are still mindful of the disparaging comments President Trump made about the Fed’s decision to hike interest rates. The political uncertainty surrounding Mr Trump at the moment is also hurting the greenback, it’s not a good image for the US president when one of his allies pleaded guilty to felonies, and another one was found guilty of a strong of felonies. The greenback has fallen to a level not seen since early August.

EUR/USD has been jolted higher by the continued sell-off in the US dollar. If the single currency keeps rising, it might encounter trend line resistance from the June high in the 1.1660 region. There were no important economic announcements from the eurozone today, so the move has been dollar driven.

GBP/USD has been boosted by the fall in the greenback. Sterling hit a two-week high due to the continued slump in the US dollar. Brexit is still the background chatter when it comes to the pound, and while it might be important political news, it hasn’t moved the pound much. 

Commodities

Gold hit its highest level in over a week on the back of the weak dollar. The inverse relationship between the metal and the greenback has been strong recently, and today is no different. It is worth noting that gold still remains in the solid downward trend that began in April. 

WTI and Brent crude oil were rallying on the run up to the Energy Information Administration report, and the larger than expected decline in inventories drove the price higher. US stockpiles fell by 5.83 million barrels, while the consensus estimate was for a drop of only 1.49 million barrels.

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