Equity benchmarks are in the red heading into the close as traders are worried about interest rate hikes from the Fed, and the political situation in Italy.

Europe

The US central bank announced that additional interest rate hikes are in the pipeline, and this has soured sentiment. Rome and Brussels are at logger heads over the proposed budget. Italy’s economy minister, Giovanni Tria, said that the EU’s proposal to reduce the deficit would be economic ‘suicide’. 

Morgan Advanced Material announced that revenue increased by 7.2% in the ten months until October, and the firm is on track to achieve its full-year target. The company confirmed that organic sales growth for the four months until October jumped by 6.4%. The stock has been in decline since August, and if it breaks below the 264p area, it could pave the way for further losses.

Informa said that underlying revenue for the first ten months ticked up by 3.9%, and will put the group on track to achieve its target of 3.5%. The firm confirmed that it was on track for a synergy saving of at least £50 million in 2019, and the aim is to save £60 million and £75 million in 2020 and 2021 respectively. The company mentioned the political risks in relation to US-China trade, Brexit and ongoing issues in the Middle East, but the firm is ‘taking necessary precautions’. Even though the share price has been in a sharp decline since July, it remains in the wider upward trend, and if it holds above 657p, the outlook should remain bullish.

Glencore, Anglo American and BHP Billiton are all suffering today due to declines in the metals market. Investors are concerned that China is slowing down, and the drop in PPI overnight adds weight to the argument. Copper, platinum and palladium are all lower on the session. The intense sell-off in the oil market, has hit the price of Royal Dutch Shell and BP.  

US

Equity markets are in the red as trader’s cash in their positions in light of the Federal Reserve’s update last night. The US central bank announced there would be ‘further gradual increases’ in the interest rate, and that prompted some dealers to exit the market. The Dow Jones and the S&P 500 are in the red, but they are well off the lows of the week, and have only handed back some of the ground made on the back of the midterms. The slump in oil has prompted fears of slower global growth so we might see further declines in the near-term.

US PPI on jumped to 2.9% in October from 2.6% in September, and it comfortably exceeded the 2.5% forecast that economists expected, and this highlights growing demand in the US. 

FX

The US dollar index is a little higher today in the wake of the Fed meeting last night. The US central bank said there will be gradual rate hikes, and this has made the greenback more attractive, especially in light of the weakness earlier in the week.

GBP/USD has been hit by the firmer US dollar, and continued uncertainty surrounding Brexit is a factor too. The DUP, who are propping up the Troy party at Westminster, are not happy about the prospect of a border between Northern Ireland and Great Britain. The UK economy grew by 0.6% in the in the third-quarter, meeting forecasts, but the economic news got overlooked for the politics.

EUR/USD has also been dented by the rise in the US dollar. French industrial production dropped by 1.8%, which undershot the -0.3% drop that economists were expecting. The update adds to the string out disappointing data from France, and the wider eurozone. 

Commodities

Gold is in the red today after the greenback rallied. The metal’s strong inverse relationship with the US dollar continues, and the commodity has fallen to a level not seen since mid-October. The markets are pricing in a high probability of a rate hike in December, and we are likely to see further monetary tightening in 2019 too, and that might keep pressure on gold. 

WTI has lost ground again, it is the 10th consecutive day it has fallen – a record losing streak. It’s the same old story with oil, concerns about over supply are doing the rounds. During the week it was revealed that the US overtook Russia to become the largest producer in the world.  

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