The FTSE 100 is higher today as the soft pound helps the UK’s blue-chip index, with financials and energy stocks gaining the most ground.

Europe

Continental markets are closed for May Day, and as a result volatility in London is low.

BP shares hit their highest level in eight years after the company posted first-quarter profits which topped analysts’ estimates. The oil titan announced a 71% rise in first-quarter underlying replacement-cost profit to $2.59 billion, well ahead of analysts’ forecasts of $2.2 billion. Oil prices have recently touched their highest levels in over three years, while BP’s production rate increased by 6%; and it’s those two factors which have led to the jump in earnings. The stock has been broadly pushing higher since early 2016, and if the bullish move continues it could target 600p.

Just Eat shares are in demand today after the company reported a more-than-respectable 49% jump in first-quarter revenue. The firm is continuing to perform well at home and abroad, with total orders in the first three months rising by 32%, while the UK division saw sales rise by 24% and international orders rose by 46%. The company reiterated its full-year profit outlook of between £165 million and £185 million. Two months ago, the share price came under pressure when the company stated it was embarking on a larger-than-expected capital expenditure programme. Today’s figures highlight how popular the product is, both at home and abroad. The stock has gapped higher and hit a two-month high, and if the bullish move continues it could target 843p.

RBS announced plans to close 162 branches which will lead to 792 job losses. The bailed-out bank had intended to launch a challenger bank called Williams & Glyn, but after reviewing its business it decided to drop those plans. The stocks is marginally lower today. 

US

US markets are mixed after President Trump pushed back the deadline to make a decision about imposing tariffs on steel and aluminium imports from the EU, Canada and Mexico. The move has given traders some respite, but the worries are likely to creep back into traders’ mindsets later this month when the June deadline nears.

The Federal Reserve begin their two day meeting today. There has been a lot of chatter about three more rate hikes from the Fed this year, and US government bond yields have been set higher on the back of it. The interest rate decision will be announced tomorrow, and even though no rate rise is expected, the US central bank might set the groundwork for a June hike. 

US ISM manufacturing came in at 57.3, down from 59.3 in March, while economists were expecting 58.3. The manufacturing sector may have slipped but the reading still indicates a strong level of output.

FX

GBP/USD took another knock after the UK revealed manufacturing figures which were the weakest since November 2016. The UK manufacturing PMI report came in at 53.9, down from 55.1 in March, and economists were expecting a reading of 54.8. This report fits in with a wider cooling of economic indicators from the UK. The pound has dropped to its lowest level versus the US dollar in over three months, and if the bearish moves continues it could target 1.3500.

EUR/USD continues to come under pressure and the currency pair has dropped to a level not seen since mid-January. The jump in US bond yields and expectation that the Federal Reserve will hike interest rates three more times this year is driving the greenback higher. There were no economic announcements from the eurozone today.  

Commodities

Gold has fallen to a two-month low as the rally in the US dollar is weighing on the metal – in fact the US dollar index has racked up another multi-month high. The inverse relationship between gold and the US dollar is strong and today is no different. The metal is nearing its 200-day moving average at $1,304, and a break below that level could point to further losses.

WTI and Brent Crude oil have been hit by profit taking after yesterday’s announcement from OPEC that output fell to a one year low. The cartel are keen to limit production in order to keep prices high, and now falling output from Venezuela and African producers has led to output falling to a 12 month low. The losses in the oil market are unlikely to be large as President Trump may reimpose sanctions on Iran later this month, and that uncertainty could keep oil prices relatively high. 

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