The major European equity markets are largely higher on the day. 

Dealers are still hopeful that Beijing and Washington DC are on the road to striking a deal. Mario Draghi, the head of the European Central Bank (ECB) was a little downbeat in his outlook, but given the economic cooling the area has experienced, and the drop in oil, his update wasn’t a surprise.   

TUI shares have rallied today after the firm announced an impressive set of results in light of the troubled travel sector. Revenue and underlying earnings ticked up by 6.3% and 10.9% respectively. The group said that underlying earnings are expected to increase by 10%, and current winter trading nearly matches last year’s level. The hotel & resorts, and cruises divisions continue to be popular. The dividend was increased from 65 cents to 72 cents, and this is a clear indication they are confident in their future earnings ability. The stock has been in decline since May and if the negative move continues, it might retest the 1,075p area.   

There is continued chatter that the German government are trying to make it easier for Deutsche Bank and Commerzbank to merge. The idea seems to be a short-sighted as the German government are keen to halt the decline of both share prices, but the bank’s wider structural problems are likely to persist. Two troubled banks, don’t make one stable one. The two companies in question need to engage in an aggressive restructuring programme, and slim down in size.

Sports Direct shares are in the red today after the CEO, Mike Ashley, described November trading as the ‘worst on record’. Mr Ashley uses the firm as a vehicle to invest in other businesses, and it rescued House of Fraser and it holds a 30% stake in Debenhams, Mrs Ashley offered to lend Debenhams £40 million, and to up his stake by 10%, but the retailer declined. It appears that Mr Ashley feels that Debenhams are in trouble, and that is weighing on the stock too.

US

The Dow Jones and S&P 500 are showing modest gains as traders are still optimistic about the possibility of the US and China striking a trade deal. Yesterday, it was reported that Beijing-controlled companies had a least 500,000 tons of US soybean – the first major shipment in six months. Traders viewed this as a sign that relation are improving.  

The jobless claims took a sizeable drop. The reading fell to 206,000 from 231,000 and economists were expecting 225,000. It is worth noting, the September low was 201,000 – its lowest level in 49 years. The US jobs market is clearly robust.

FX

EUR/USD is in the red after the after Mario Draghi, the head of the ECB lowered the growth and inflation forecast, and the balance of ‘risk is moving to the downside’. The slightly dovish tone of the update put pressure on the single currency.

GBP/USD is flat after yesterday’s rally on the back of Theresa May comfortably winning her confidence vote. The Prime Minister is still trying her best to get a little wiggle room in relation to the Irish border. There is still the little matter of the withdrawal agreement to deal with, but for now traders are optimistic about the pound. 

Commodities

Gold is lower today on account of the firmer US dollar. The inverse relationship between the two markets is strong today. The commodity suffered a large fall between April and August, but since then it has been pushing higher, and if the bullish move continues it might target the $1,265 region.   

Oil is in the red today as traders are worried about the relatively high levels of global stockpiles. The smaller-than-expected draw in US stockpiles yesterday prompted traders to be worried that inventories are still too high. Now the dust has settled in the wake of the OPEC meeting, traders are still fearful that the cuts weren’t enough to boost the price.

 

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