European equity markets have largely been a mixed bag today, and the Spanish market underperformed on the back of the national election. 

Europe

The IBEX 35 in the red the after the general election at the weekend. The Socialist party took the most seats - 123, but failed to get a majority. This is likely to lead to weeks, or even months of political negotiations in order to hammer out a deal with another party, with the aim of forming a government. The far-right Vox party won 24 seats, and this is further evidence that populist movements are gaining momentum in Europe.

Ocado shares are in the red after the company confirmed that an electrical fault caused the fire at the Andover site. The group announced that it has now taken the steps to reduce the risk of such an event reoccurring. Ocado plans to install heat sensors at their sites as well as extra smoke alarms. The batteries that were used at the operation in Andover are not used in other facilities. Given that the firm is extremely dependent on technology, it seems that this event acted as a wake-up call to the group, and safety standards should improve from here, and that is likely to lift consumer confidence.

Galliford Try shares are higher again today on the back of last week’s announcement that the company won a contract to build the first 725 homes at the Meridian Water scheme in North London. 

JP Morgan has raised their price target for IWG to 340p from 270p, but despite the sizeable increase in price target, the stock is down on the day.

US

The S&P 500 reached an all-time high as trader feel the Federal Reserve are likely to keep their policy on hold in light of the latest core PCE update. The core PCE reading dropped to 1.6% in March – the lowest reading since January 2018, and it undershot the 1.7% forecast. The update is the Fed’s preferred inflation measurement, and seeing as the US central bank has an inflation target of 2%, it is clearly moving in the opposite direction. The monthly personal income figure dipped to 0.1% from 0.2%, but that was offset by the surge in consumption to 0.9% from 0.3%. In order to sustain high levels of consumption, income levels will need to tick up.

Spotify confirmed the number of premium subscribers has hit 100 million. The company has announced that monthly active users jumped by 26% in the first three months, and revenue grew by 33%. Earlier this year, Spotify entered the Indian market - where it now has in excess of two million users. Podcasts are proving popular on the site too, and is another factor in the growth. Despite the solid numbers, the stock is in the red. 

Alphabet, Google’s owner, will be in focus today as the company will release its first-quarter figures after the closing bell tonight. At the last quarterly update, the company said that cost increased as the firm took the decision to promote YouTube and its cloud business. The tech giant has a stake in Lyft, and given the sharp sell-off since the IPO last month, investors might have lowered forecasts.

FX

EUR/USD has edged up a little as short covering has helped the single currency. On Friday, the currency pair dropped to its lowest level since June as worries for the eurozone’s economic health persist.

GBP/USD is in the red as the pound’s drift lower from the March-high continues. Brexit might not be in the news as much these days, and it feels like the pound is in limbo. While sterling remains below the 1.3000 mark, its outlook should remain bearish.

Commodities

Gold is a little lower as profit taking has set in. The metal pushed higher in the latter half of last week and now some of that ground has been handed back. The bearish move since February is still in place, and if last week’s low is taken out, it might pave the way for $1,250 to be targeted.

Oil has lost some more ground on the back of Friday’s sharp sell-off – when President Trump said he pressured OPEC to bring energy prices down. The energy market has seen a huge rebound in 2019, so further profit taking wouldn’t be a surprise.

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