European stock markets are mixed this afternoon as traders remain cautious about the global political outlook. 

Europe

The possibility of a trade war between the US and China is still bubbling away in the background, and the Russian sanctions are still playing on traders’ minds. Dealers are likely to remain nervous until there is some progress on geopolitical issues.

The internationally-exposed FTSE 100 index has been given a hand by the slide in sterling, on account of dovish comments from Bank of England governor Mark Caney last night. As a result, the prospect of a rate hike next month has diminished.

Barclays’ CEO Jes Stanley faces being fined by the UK regulator for allegedly trying to identify a whistleblower in the bank. The Financial Conduct Authority believes that Mr Staley failed to act ‘with due skill, care and diligence’. This puts a dent in Mr Staley’s and Barclays’ reputation. The bank echoed the view of the regulator that this does not call into question Mr Stanley’s ability to run the bank. Barclays share are up 4% today.

Reckitt Benckiser shares are in the red after the company posted figures that were good, but not good enough. First-quarter like-for-like sales rose by 2%, but analysts were expecting an increase of 2.6%. The division in North America performed well, with a 6% rise in sales, but Europe, Australia and New Zealand saw sales slip by 1%. Reckitt Benckiser said it’s on track to achieve a growth target of between 13% and 14%, but warned that the retail climate is challenging. The stock has been in decline since June 2017, and if the bearish trend continues it could target 5,000p.

US

US indices are in the red as traders lock in their profits after a broadly positive week. The Dow Jones and S&P 500 are both firmly above their respective 200-day moving averages, but traders are a touch nervous as all the current geopolitical issues are still to be resolved.   

General Electric shares are higher today after the company announced stronger-than-expected earnings and sales. Earnings per share came in at 16 cents, while analysts were expecting 11 cents, and revenue was $28.66 billion compared with the $27.45 billion anticipated. The health division, transport and aviation departments all saw strong growth, while the energy and oil and gas businesses struggled. The stock may be higher today, but it has lost over 50% since January 2017, so it as coming off a low base. All divisions of the business need to be firing on all cylinders in order turn around the downward trend. 

FX

GBP/USD is under pressure after Mark Carney’s comments last night. In recent months there was a lot of speculation the Bank of England could hike interest rates next month, and in light of Mr Carney’s remarks, a rate rise looks less likely now. Traders are almost evenly divided over whether there will be a rate hike next month. The pound has enjoyed a positive run recently, and we are now seeing some profit-taking. Sterling has been rising versus the US dollar for over a year, and while it holds above the 1.3800 region, its outlook could remain positive. 

EUR/USD has come under fire from the US dollar. The US dollar index hit its highest level in over two weeks, and the euro is also suffering. It has been a quiet day in terms of economic data from both the eurozone and the US. German PPI ticked up to 1.9% from 1.8%, but economists were expecting 2%. The slight increase in PPI might trickle down to higher CPI in the months to come.

Commodities

Gold is under pressure today after the greenback hit a two-week high. The two markets have a strong inverse relationship, and that is playing out today. Gold has been pushing broadly higher over the past month, but it has struggled to break out of its range. The metal would need to clear $1,365 or break below $1,320 in order to snap out of the recent trading range.

WTI and Brent Crude oil are in the red as traders lock in their profits. This week oil reached fresh 41 month highs and now we are seeing some traders wind down their positions ahead of the weekend. The energy market has been in a strong upward trend since June, and seeing the tensions in the Middle East are still high, the wider upward move is likely to continue.

President Trump expressed his anger at OPEC and non-OPEC members for ramping up the price of oil, and he declared it would not be accepted. Mr Trump didn’t elaborate as to how he would put pressure on the oil market, but he could be suggesting the US might boost output.  

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