Stock markets in Europe are lower heading into the close as trade concerns have resurfaced. 

Europe

Yesterday, President Trump said a trade deal with China has a ‘long way to go’, and he also reminded the Chinese government that tariffs could be slapped on $325 billion worth of goods. The announcement from the US leader was a gentle reminder the situation isn’t resolved, and traders used it as an excuse to trim their equity positions.    

Saga shares are higher this afternoon after Elliott, the activist investor, confirmed it has a 5% stake in the group, and the fund might seek to break-up the struggling firm. Sage shares slumped to an all-time low last month on the back of a profit warning, and now it seems that Elliott are swooping in at the low. The tour business is holding Saga back, and it is no surprise that Elliott are contemplating spinning off the different businesses.  

Prudential have upped their stake in Reach to 10.12% from 5%, and the news sent the stock higher.

Galliford Try said it expects annual profit to be in line with analyst expectations. The group has finished restructuring its construction division, and it is reducing its exposure to the London housing market. The order book has dropped by 12%, and 88% of revenue for next year has been secured. The stock is up on the news.      

US

The S&P 500 and NASDAQ 100 are lower as traders are a little nervous in relation to US-China trade relations. Both indices recently were at record highs, and the remarks from Mr Trump yesterday acted a speed bump for the bulls. Traders know when he is angry, and latest comments seem like a mild warning to China, and that’s why stocks are moderately lower. 

Qualcomm shares are in demand this afternoon after the Department of Justice (DoJ) requested that a Federal Appeals court put on hold the antitrust ruling levied against the group. The Department of Energy and the Department of Defence supported the DoJ’s move, saying it would be difficult to replace the firm’s 5G technology.  

Bank of America posted some good metrics, but the lending profitability waned, and that caught traders’ attention. EPS jumped by 8% on an annual basis to 74 cents, which topped the 71 cents forecast. Revenue edged up by 2.1% to $23.2 billion, meeting forecasts. Net interest margin dipped by 7 basis points to 2.44%, and it undershot the 2.47% forecast. Seeing as the Fed is tipped to cut rates this year, the bank’s lending margin might come under pressure in future quarters.            

FX

USD/CAD is in the red as Canadian inflation met expectations. The Canadian CPI rate dropped from 2.4% in May to 2% in June, meeting economists’ forecasts. The BoC core CPI rate cooled from 2.1% to 2%. The currency pair has been pushing lower since late May, and a break below the 1.3000 mark, might put 1.2926 on the radar.

GBP/USD has been helped by the softer US dollar, and the UK inflation figures assisted the pound too. The headline CPI rate held steady at 2%, and the core CPI report crept up to 1.8%, so underlying demand is firm.

EUR/USD was assisted by the eurozone CPI report which edged up to 1.3% from 1.2%. The core reading came in a 1.1%, which was flat from the revised May report. The fact that underlying demand is holding steady is somewhat positive.   

Commodities

Gold is up on the session thanks to the dip in the US dollar. The metal is at the upper end of its recent range, and if the bullish move continues it might retest the $1,439 area.

WTI and Brent crude saw a jump in volatility on the back of the inventory announcement. According to the Energy Information Administration, US oil stockpiles dropped by 3.11 million barrels, while traders were expecting a drop of only 2.69 million barrels. Gasoline stockpiles jumped by 3.56 million barrels, while the consensus estimate was for a drop of 925,000 barrels. The gasoline numbers outweighed the oil data, and trade woes were a factor too.      

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