Equity markets in Europe are largely in positive territory heading into the close. 

Europe

Trading started out on a negative note, but indices broadly pushed higher throughout the session. The European Central Bank will announce its interest rate decision on Thursday, and there is speculation about a cut, and possibly an announcement of a government bond buying scheme too. The Fed cut rates in June, and there is talk they will cut again next week, so the ECB might be tempted to get out in front of them and loosen monetary policy first. Seeing as the ECB are tipped to go down the path of an interest rate cut, stocks are likely to be buoyant between now and the announcement.      

JD Sports continue to buck the trend of a downbeat retail sector as first-half revenue jumped by 47%, and pre-tax profit rose by 6.6%. The fashion firm issued an optimistic statement too, and the group expects full-year profit to be at the upper end of expectations, despite the uncertainty caused by Brexit. The US-China trade spat is taking its toll on the group as there was drop off in Chinese consumption. Today’s update sent the stock to an all-time high.

Galliford Try rallied on the open after Bovis Homes approached the company about acquiring its home building unit for £1.08 billion. This isn’t the first-time the company tried to acquire Linden Homes – Galliford’s house building unit, and it was previously knocked back because the offer was too low. Should the move go ahead, it would give Galliord a cash boost of £300 million, and it would help the firm focus on its core business. Bovis clearly wants to expand their empire, but seeing as the boom times in UK house building seem to be over, is now a good time to be expanding. Gallifird shares are higher on the day, but have dropped a lot from the morning.

888 Holding shares have dropped after the group posted a 63% fall in first-half pre-tax profit. The company said that higher online taxations, and expenses in relation to Brexit caused profits to slump. Adjusted earnings margin declined to 15.1% from 19.2%. The stock is in the red.                         

US

Sentiment is a little soft on Wall Street as traders have been left uninspired by the lack of major news. Dealer are still hopeful about the US-China trade situation, and China’s Li, said that both sides should find a solution to the trade spat. Today’s small down move should be taken in the context of the broader rally since late August.   

HD Supply confirmed it had a ‘difficult’ start to the year. Second-quarter revenue was $1.6 billion and traders were expecting $1.63 billion. The group now expects the full-year EPS to be between $3.45 and $3.60, while traders were expecting $3.58.  

Apple will reveal the iPhone 11 later today, and the stock is experiencing low volatility ahead of the announcement. The new smartphone is unlikely to be a game changer seeing as iPhone sales are already slipping, and the consumer climate around the world has deteriorated a little. Later this year, iPhones will have 5G, and until then, some consumers might swerve the iPhone 11.  

FX

GBP/USD has rallied on the back of the largely positive jobs data from the UK. The unemployment rate fell to 3.8% - its joint lowest level since the 1970’s. Average earnings excluding wages cooled from 3.9% to 3.8% The CPI rate is 2.1%, so workers are getting a nice increase in real wages, and that could stand to the economy.

USD/CAD hasn’t moved much today. In August, Canadian housing starts came in at 226,000, which topped the 212,500 forecast, and that was an improvement on the 222,000 posted in July. The Canadian economy is holding up well, and that was underlined by last week’s jobs report. 

Commodities

Gold has fallen back to a level last seen in mid-August. The metal hit a six-year high when trade tensions between the US and China ticked up, and now that things have simmered down a little, traders are exiting out of gold. Should the recent pullback in the metal continue, it might target the $1,480 area.

WTI and Brent crude have rallied again as there is the belief that OPEC and non-OPEC members will maintain their curbed production scheme. Prince Abdulaziz bin Salman, the new Saudi energy minister, recently claimed the current output might remain in place for the foreseeable future, and that continues to help the oil market.  

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