The mood in the markets today is one of disappointment in the wake of the update from President Trump yesterday. 

Europe

Dealers were hoping for clarity in relation to trade, and many were expecting the US leader would defer making a decision on EU auto tariffs, but instead he boasted about his achievements. Mr Trump was pointing out that he had done a great job so far, and he laid the groundwork for the election next year. The lack of trade talk yesterday, caused dealers to drop stocks as European markets have been strong recently. Without any progress with regards to trade, we could be in for sideways trading in the near-term.

JD Wetherspoon shares are in demand after the company issued a bullish update. Like-for-like sales for the 13 weeks until late October increased by 5.3%, and total sales ticked higher by 5.6%. The pub group is planning on opening between 10-15 pubs in this financial year, which is a bullish move seeing as pub closures have been a theme of the past decade. The group continues to reorganise its business as it closed four underperforming sites, and it opened one new pub. The stock has pulled back a little from its all-time high in September, but it remains in its wider upward trend.

Wizz Air raised the lower end of its annual earnings forecast. The low-cost airline now foresees full-year profit to be between €335 million and €350 million, while the previous forecast was &euro 320 million and €350 million. In the first six months the company saw an increase in passengers carried of 17.9%, and revenue for the time period increased by 21.7%. The travel sector has been under pressure recently as some consumers are cutting back on spending. Wizz Air has to stay nimble in terms of air fares, but it did see revenue for ancillary services jump by over 38% - which shows they are getting more from their clients.

Tullow Oil shares took a knock today after the group cut its full-year production guidance. The previous forecast was 89,000 – 93,000 barrels of oil per day (bopd), while now the new guidance is 87,000. The production in Ghana was below expectations and cash flow was dented on account of the division. The energy market has been subdued as dealers are worried about global tensions, which could equate to soft oil price. Lower production combined with falling oil prices does not bode well for Tullow.

US

The major indices have retreated from the gains of yesterday as traders are less bullish post Trump’s update. US headline inflation edged up to 1.8% last month from 1.7% in September. The Fed’s target is 2% so it still has some way to go before the central bank will be happy. Jerome Powell, the head of the Fed, is expected to give speech alter today, but a transcript of the speech has already been released. The update essentially said the Fed won’t alter interest rates while the economy enjoys ‘sustained’ expansion.

Alibaba is seeking to have a secondary listing in Hong Kong. There is talk the e-commerce titan could raise up to $13 billion from the move. Some traders are questioning the decision to list shares in Hong Kong at a time when the region is undergoing major unrest. The financial hub has a great reputation as a place to do business but the recent violence and demonstrations are chipping away at that. The listing might make it easier for Chinese investors to buy into the firm.

Tilray saw a surge in revenue to $51.1 billion, from $10.1 billion in the same period last year. The group posted a loss per share of 36 cents, while analysts were expecting a loss of 30 cents. The jump in revenue was largely attributed to the acquisition of Manitoba Harvest, but is it worth noting that medical cannabis sales to Europe increased. It is encouraging to see the group getting traction on this side of the Atlantic.  

FX

GBP/USD is lower on the back of the poor UK inflation data. The headline CPI rate slipped to 1.5%, its lowest reading in nearly three years. Keep in mind the Bank of England’s target is 2%, and in the latest meeting, two members of the MPC voted in favour of cutting rate cuts. The UK central bank are likely to sit on their hands until Brexit has been wrapped up, but the votes by the policy makers was interesting nonetheless.

EUR/USD hasn’t moved much today as it was a quiet day in terms of economic announcements. Eurozone industrial output increased by 0.1%, which was a pleasant surprise as traders were expecting a drop of 0.3%. The single currency dropped back to a level last seen nearly one month ago, largely on account of US dollar strength.  

Commodities

Gold has rebounded from the three month low that was witnessed yesterday. The commodity has traditionally benefitted when stocks are lower and that is what we are seeing today. Traders have trimmed their exposure to stocks on account of Trump’s speech yesterday, which explains the upward move in gold.

WTI plus Brent Crude were given a lift after OPEC predicted the growth of shale production in 2020 is likely to be less than initially expected. The group also claimed it doesn’t see any signs of a global recession on the horizon. The energy has been gaining ground for over one month, and the progress that has been made between Washington DC and Beijing has helped the energy market as a drop in trade tensions bodes well for global demand.  

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