European stock markets have gained ground today even though the tension between the Italian government and the EU has risen. 

Europe

The EU announced that Italy will be disciplined for their budget, and this could cause massive instability in the region. If tensions continue to be strained, it might hurt the Italian government bond market, which could weaken the banking system. Brexit is still doing the rounds in the news, but traders are unlikely to take any notice until there are new developments.

Kingfisher shares are lower today after the company confirmed that the French division is still struggling. Third-quarter like-for-like sales (LFL) fell by 7.3%. The French division has implemented a turnaround plan, but traders are likely to remain cautious until the division shows signs of recovery. The UK operation is still the top earner, even though B&Q LFL sales fell by 2.9%. Screwfix, the more industry focused business saw sales jump by 4.1%.The group is going to exit its businesses in Spain, Russia, and Portugal. The share price has been falling for over two years, and if the bearish move continues it could target 200p.

Sage shares are in the red even though the company posted solid full-year results. Revenue and pre-tax profit jumped by 7.6% and 16.4% respectively. Investors have been cautious of the company this year as its performance has been underwhelming. A new CEO was appointed earlier this month, and Mr Hare is keen to devote more resources to cloud computing – a rapidly expanding business. The stock has been in decline since January, and if the negative move continues it might target 482p.

Johnson Matthey revealed a 19% jump in first-half pre-tax profit. The firm also issued a positive outlook, as it expects the operating performance to be at the upper end of the guidance. The interim dividend was hiked by 6.9%, and this underlines the firm’s bullish viewpoint. The share price has been in decline since June, but if it can hold above the 2,750p mark, it might target the 50-day moving average at 3,180p.

US

The S&P 500 and NASDAQ 100 have bounced back today after enduring heavy selling yesterday. The gains made pale in comparison to the ground lost yesterday, so there is still a sense of worry. For some US traders, today will be the last full trading day this week, as the US celebrates Thanksgiving tomorrow, so we could see some book-squaring today.

Foxconn is a company which assembles smartphones, and it counts Apple as one of its largest customers, and has announced plans to cut $2.88 billion form its expenses next year. It is believed the group wants to trim the headcount of non-technical staff by 10% next year. This is seen as the latest negative story connected to Apple, and now investors are even more fearful that we have reached peak iPhone.

Deere shares are higher today even though the company cautioned about year’s sales Net sales in the past year grew by 26%, but the group anticipates sales growth to slow to 7% in 2019. The company cited sluggish demand in Europe, and warned about falling demand in Asia, as well as higher productions costs for the less optimistic outlook.

US durable goods dropped by 4.4% in October, which undershot the 2.5% drop that economists were expecting .The report which strips out transport, showed an increase of 0.1%, while the consensus estimate was 0.4%. The jobless claims report was 224,000, up from 216,000 last week.

FX

The US dollar index has retreated today, but the greenback is still in its wider upward trend. The latest durable goods report and jobless claims report added to the pressure on the greenback.

EUR/USD is higher on account of the softer greenback. Traders seem to be unfazed by the political battle Italy and the EU. Italy’s joint deputy prime minister, Matteo Salvini, made it clear the government has no intention of reducing the proposed budget deficit, although there were conflicting reports earlier this morning. The EU have stated that Italy will be disciplined for their budget, and Mr Salvini said sanctions would be disrespectable to Italians.

GBP/USD has also been given a lift by the dip in the US dollar. The UK’s public sector net borrowing jumped by to £7.95 billion, which exceeded the £5.35 billion that economists were expecting. Brexit still dominates when it comes to the pound, and even though there are still questions whether Theresa May can get her draft agreement approved, the lack of negative news of propping up the pound.  

Commodities

Gold has ticked up on account of the weaker US dollar. The metal continues to experience low volatility. While the commodity holds above the $1,200 mark its might move higher. A break above $1,243 might bring $1,265 into play. 

Oil has rebound from the massive decline yesterday, but the latest US inventory data report put pressure on the energy. According to the Energy Information Administration, US oil stockpiles jumped by 4.85 million barrels – topping the forecast of 2.94 million barrels.

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