Stocks are firmly higher this afternoon as traders have put the latest round of US-China tariffs behind them. 

Europe

The bullish sentiment in the US last night has spilled over to Europe, and investors are content to take on more risk again. The FTSE 100 has given a lift by the sell-off in sterling on the back of Theresa May’s statement regarding the EU negotiations, where the Prime Minister made it clear she is literally willing to walk away from if the EU’s offer doesn’t measure up. In London, mining companies like BHP Billiton, Glencore and Anglo American are higher as concerns about China’s demand for minerals have subsided.

Sky face their final show as Fox and Comcast prepare for one final push to acquire the company. Given that Fox’s bid is lower, 1,400p, they will be given an opportunity to top Comcast’s 1,475p bid, and if Comcast want to exceed Fox’s offer it will then revert to a simple auction. Disney is in the process of buying the bulk of Fox’s entertainment assets and should they acquire Sky, it would add to their extensive back catalogue of content. Comcast are keen to add to their pay-for-view TV service and Universal Pictures. Since Netflix and Amazon Prime have been pumping billions into content, the focus is now to build up a library of TV shows and films that are in demand. If companies don’t keep up with popular programming they will get left behind.

Investors have lost their appetite for Just Eat shares after it was revealed that Uber are interested in acquiring Deliveroo for ‘several billion’ dollars. This rattled investor sentiment as some traders are fearful that synergies and a cash injection from Uber acquiring Deliveroo could challenge the company. In May, the group posted an impressive rise in revenue at home and abroad. The stock came under a little pressure after the company outlined aggressive capital expenditure plans, but now we can see why the company was keen to expand its operation. The stock has been pushing higher for over two and half years and if it holds above the 660p mark, the bullish move might continue.

Smiths Group confirmed that full-year revenue dropped by 2%, and pre-tax profit fell by 8%. In July, the company said that revenue would be lower on account of losing two contracts at its medical unit. The medical department also lost out on account of some of its products being suspended due to the loss of certifications ahead of new EU rules. The firm hopes to rectify the EU regulation situation in the second-half of this financial year. The strong oil price has helped its oil and gas components division, and the detection unit won new contracts in China and the US.  

US

It’s another positive day in New York as the Dow Jones and S&P 500 have set fresh records. The bullish momentum rolls on and it could see a repeat of what we witnessed at the beginning of the year – a series of all-time highs. The heightened trade tensions between Washington DC and China have not fazed investors, and even though relations remain strained, they are stable for now.

The services PMI report for September fell to 52.0 –its lowest level since December 2017. The sector has been growing at a slower pace since June – when it hit a 10 month high. This is a little out of step with the recent economic indicators that have been released from the US. It is a little worrying that the largest component of the US economy is cooling while the Federal Reserve is in a hiking cycle.

FX

GBP/USD sold-off severely after as Prime Minister May said the Brexit negotiations were at an impasse’. Mrs May made it clear there will be no second referendum on the UK membership of the EU and there will be no customs border between Northern Ireland and Great Britain. The British premier stuck to her guns and reiterated her stance that ‘no deal, is better than a bad deal’. The pound dropped sharply as dealers are not expecting an agreement to be reached any time soon.   

EUR/USD is a little weaker due to a turnaround in the US dollar, and the underwhelming manufacturing and services data from the France and the Germany hurt the single currency too. The French manufacturing and services PMI reports showed lower growth on the month and came in below analysts’ expectations. Germany’s reports were mixed as the services were strong, while we saw a slowdown in activity in manufacturing.

USD/CAD saw a jump volatility after Canada released respectable economic indicators. On an annual basis, Canadian inflation slipped from 3% to 2.8% in August – meeting expectations. Monthly retail sales grew by 0.3%, and the June report was revised higher from -0.2% to -0.1%.     

Commodities

Gold lost ground today due to the rally in the US dollar. The metal continues to have a strong inverse relationship with the US dollar. Gold has been losing ground since April, and while it remains below the 50-day moving average at $1,208 its outlook might remain negative.

Oil prices have recovered from yesterday’s comments from President Trump. Traders have reverted back to their previous position where they were concerned about global supply. Iran are due to be hit with sanctions in November, and seeing as some oil-producing nations are at max capacity, it might be difficult to make up the shortfall. 

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