Stock markets in Europe have had a good session considering the multitude of ongoing issues. 

Europe

President Trump has reverted to a tough stance with both the EU and Canada regarding trade deals. He has proven once again that he is unpredictable. German car manufactures like BMW, Volkswagen and Daimler are lower on the session as Mr Trump has the European auto sector in his firing line.

Overnight there was further evidence that China is slowing down, as the Caixin survey of Chinese manufacturing slipped to 50.6 – a 14 month low. Adding to Beijing’s problems is the prospect of even more tariffs from the US. Despite the negative sentiment surrounding China, there has been a move higher in metals, and in turn a positive move in mining stocks like Glencore, Anglo American, and Rio Tinto.

Inflation in Turkey has jumped to 17.9%, and seeing as President Erdogan has no intention of hiking interest rates the Turkish lira came under renewed selling-pressure. The situation in Turkey could pose a problem for the eurozone as banks in the region have exposure to the troubled country. The demise of the Turkish lira, Argentine peso, the Indian rupee fits in with a wider theme of uncertainty in emerging market (EM) economies.            

WPP confirmed that co-chief operating officer, Mark Read, will become the next CEO. The announcement comes the day before WPP first-half earnings will be released. The group has been leaderless since Sir Martin Sorrell stepped down a number of months ago amid allegations of misconduct. The advertising industry is changing, and investors will be looking to Mr Read to grab back some of the business that was lost out to Google and Facebook in recent years.    

Dechra Pharma shares have sold-off severely today after the company confirmed it is drawing up contingency plans for Brexit. The firm said that ‘challenges’ are developing at a faster pace, but they are well-equipped to deal with them. The pharmaceutical company posted strong full-year results as revenue and operating profit jumped by 13.9% and 24% respectively. The dividend was hiked by 18.9%, and the firm had a strong start to the new financial year. The share price has been driving higher for over two years, and while it holds above its 50-week moving average at 2,520p, the outlook might remain positive.

US

The New York Stock Exchange is closed today as the US celebrate Labour Day. 

FX

GBP/USD had a big sell-off today after the UK posted disappointing manufacturing figures. The manufacturing PMI report fell to 52.8 in August – a two year low. The update comes as there is still uncertainty surrounding Brexit. Michel Barnier, the EU negotiator, said he is ‘strongly’ opposed to Prime Minister May’s trading proposals. Meanwhile Mrs May, will not comprise on the plans she mapped out at Chequers. Once again, the water has been muddied regarding the discussions, and while there is no easy end in sight, pressure is likely to remain on the pound.

EUR/USD has ticked up a bit today, but volatility is low, partially because US traders are on holidays. There were mixed manufacturing reports from major eurozone countries today. The French and Spanish manufacturing PMI reports showed an increase in the growth rate in August, while the German and Italian reports missed economists’ expectations and showed a decline in the growth rate.    

Commodities

Gold is fractionally higher and it has seen a small range today. The metal is dancing around the $1,200 mark and the lack of volatility in the greenback is playing into it too. The commodity has been at the mercy of the strong US dollar in recent months, and traders will be looking ahead to the US non-farm payrolls report on Friday.

WTI and Brent crude are higher as traders are worried about future supply from Iran as the US imposed sanctions will be enacted in November. Iran is a major oil producer and President Trump is taking a tough line with the regime. Brent crude hit its highest level since mid-July, and if the bullish move continues it could target $80.00 per barrel.  

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