market relief

European car manufacturers like BMW, Daimler and Renault are in demand today following positive trade talks between President Trump and the European commission’s Mr Juncker last night. 

Europe

Before the meeting, dealers were worried that Mr Trump would follow through on his threat to slap tariffs on EU cars that are imported into the US. Now that the relationship between the two sides has improved, traders are snapping up car manufacturing stocks.     

Sky announced a respectable set of full-year figures. Like-for-like sales and earnings jumped by 5% and 9% respectively. The firm had a strong finish to the year, as the UK and Ireland department added 20,000 new customers in the fourth-quarter. Demand for Sky Q, Sky Fibre and Sky Mobile is strong, and it is encouraging to see that other services are popular. Sky confirmed that their investment in their own content is paying off. The battle for good content is heating up, and this should give Sky a boost. The company revealed it was a ‘ground-breaking’ year for the Italian operation, and the German business is performing well too. The stock has been pushing higher since late 2016 and, seeing as the stock is at the centre of a bidding war, the upward move is likely to continue.

Royal Dutch Shell’s second-quarter current cost of supplies – which is a measure of profitability –increased by 30% to $4.69 billion, which fell short of the $5.96 billion that was expected. The oil titan revealed a major disinvestment scheme in 2016 and today it confirmed that the  scheme is almost complete. Royal Dutch Shell revealed a $25 billion share buyback scheme, but this sweetener failed to lift the share price. The stock has been in an upward trend since March, and if the positive move continues it could target 2,850p. 

US

The Dow Jones is higher today and sentiment has been boosted as the US-EU trade talks went well yesterday and reporting season continues. The NASDAQ 100 and the S&P 500 are in the red on account of the disappointing Facebook update.   

Facebook shares have suffered a severe sell-off after the firm revealed second-quarter figures last night. The social media giant missed equity analysts’ estimates on revenue and user growth. The real damage was done when the company warned that revenue growth would continue to decelerate in the second-half of 2018. The stock has enjoyed an enormous rally since March and now the lofty valuation is being called into question. For months, traders have been talking about the stock being overstretched, and it appears that this has come to a head.

McDonald’s had a difficult quarter, but the company still managed to top forecasts. Adjusted earnings per share were $1.99, while analysts were expecting $1.92, and revenue was $5.35 billion, which was slightly above the consensus estimate of $5.32 billion. Same-store sales jumped by 4%, and StreetAccount were anticipating 3.5% growth. The fast food firm’s reputation was damaged in the US when it had to recall salads from approximately 3,000 restaurants across the country due to tainted lettuce. Sales in Europe remained strong though.   

FX

EUR/USD sold off in the wake of the update from Mario Draghi, the European Central Bank chief. The central banker confirmed that interest rates will remain on hold ‘through the summer’ of 2019. The single currency sold off on the back of this as traders won’t be fearful of a rate hike from the ECB for some time to come.

The weakness in the euro pushed up the US dollar index, and in turn GBP/USD was driven lower too. There were no major economic announcements from the UK today, so the pound was at the mercy of the US dollar.       

Commodities

Gold is lower today on account of the jump in the US dollar. The surge in the greenback in the wake of the ECB meeting prompted traders to dump the metal. Gold has been in a downward trend since April, and if the bearish move continues it could target $1,204.

WTI and Brent crude oil have experienced relatively low volatility today as it has been a quiet session in terms of news. Oil is off the lows of the month and Iran is still at the forefront of traders’ minds as the US has sanctions lined up for the major oil exporter. Tensions in the Middle East are high after the Yemeni Houthi militia attacked Saudi Arabian tankers yesterday, and this has prompted fears about supply.              

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.