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Stocks are set to finish the session firmly in the red in the wake of the poor French manufacturing and services reports, and the dreadful German manufacturing update. 

Europe

French manufacturing and services came in at 49.8 and 48.7 respectively – both are in contraction territory. The German manufacturing PMI report rattled investor confidence as the reading dropped to 44.7 – it’s lowest since July 2012. The updates underlined how fragile the eurozone is, and traders are worried about how the region would cope in the event of a no deal Brexit.

Deutsche Bank said it expects revenue to be slightly higher this year, as the investment banking unit is expected to eke out a small increase in revenue. The troubled bank still has problems as its capital position is likely to be negatively impacted by pending supervisory assessments. On the litigation front, many uncertainties still exist, and expenses are tipped to be ‘significantly’ higher than in 2018. Despite the dismal share price performance in recent months, it has been announced that the management will get paid a bonus –the first in four years. The talk of a merger with Commerzbank is still doing the rounds, and it has split political opinions, but two weak banks are unlikely to make one strong bank. The stock initially traded higher in early trading, but the wider negative sentiment took hold, and now it is in the red.

Smiths Group declared that it will spin-off the medical devices unit via a stock market listing. The group attempted to merge the unit with ICM Medical last year, but both sides were unable to strike a deal. The firm believes that opportunities will be maximised from the demerger. Smiths Group said full-year underlying profit slipped by 2%, while underlying revenue edged up by 2%.

Aggreko shares are higher after a couple of broker upgrades. Jefferies increased its price target to 1,170p from 1,100p, and Stifel raised their rating from hold to buy, and upped the price target to 880p, from 840p.

In terms of share price movement, it has been another disaster for Debenhams as the company is trying to secure £200 million from existing lenders in a bid to try and halt Mike Ashley’s advances. The struggling retailer is doing all it can to remain free from the clutches of Mr Ashley, but it is coming at the cost of the shareholder.

US

Stock markets are in the red as traders are worried about the state of the global economy. There were mixed economic updates from the US today. New home sales ticked up to 5.51 million, topping the forecast of 4.93 million. The manufacturing PMI report fell from 53 to 52 – a 21 month low, while the services PMI report cooled to 54.8, from 56. There appears to be a growing trend of slowing manufacturing and services around the world.

Nike shares fell to a one month low despite the company releasing solid third-quarter figures last night. Adjusted EPS were 68 cents, which topped the 65 cent forecast, and revenue was $9.611 billion, broadly in line with forecasts. The Converse brand saw a 2% dip in sales, and that worried some investors.

Boeing shares are in the red after Garuda, an Indonesian airline, cancelled an order for 49 737 Max jets. Traders are worried this might become common practice.

FX

EUR/USD sold-off severely on the back of the gloomy economic indicators from France and Germany. Between the announcement of the new targeted lending programme from the European Central Bank earlier this month, and now the dismal manufacturing numbers, the euro has taken a battering recently.

GBP/USD has given a boost after it was confirmed that the UK’s impending departure from the EU has been extended. Depending on how the withdrawal agreement vote goes next week, Brexit day might be in April or May.  

Commodities

Gold has been pushed higher as traders viewed the mixed data from the US as a sign the Federal Reserve won’t be hiking rates any time soon. The sell-off in global equities has also pushed up gold as dealers are in risk-off mode. Gold’s rally is all the more impressive given the push higher in the greenback.

Oil is the red as traders took some money off the table in light of the disappointing manufacturing numbers from France, Germany and the US. Multi-month highs were reached this week so the poor economic updates were a good excuse for traders to trim their positions ahead of the weekend. 

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