Equity markets in Europe have bounced back a little from the massive losses that were racked up on Friday. 

Europe

The fact the Chinese central bank injected $173 billion worth of liquidity into the markets calmed some nerves in this part of the world, as it shows they are willing to do what it takes to cushion the blow of the coronavirus fall-out. Traders took advantage of the relatively cheap share prices and snapped up some bargains. The slump in the pound has prompted the FTSE 100 to outperform. The international nature of the British index means it tends to do well when sterling is relatively cheap.

Ryanair’s update largely pleased traders as the company announced a third-quarter net profit of €88 million, and keep in mind the company incurred a loss of €66 million in the same period last year. Revenue per passenger rose by 13%. The low-cost carrier confirmed that air fare revenue increased by 9% while ancillary revenue increased by in excess of 20%. It is encouraging to see the company is maximizing its revenue streams as the air fares war can be tough. The group expects full-year revenue per guest to increase by 3-4%, topping forecasts. The group might encounter operational issues at the back end of the year as it will not receive delivery of Boeing 747 Max aircrafts until September or October.  

Ingenico has agreed to be acquired by Worldline. The move is fuelled by a decision to create the fourth-largest payments company in the world. The payments industry has been under pressure from the rise of payments being carried out on smartphones, so the sector has seen consolidation in recent years. The rapid expansion of the smartphone is likely to keeping hurting the industry, so firms within the sector will need to stay nimble, and acquisitions can be used to keep costs down through economies of scale.     

Future’s shares are higher this afternoon in the wake of the sizeable declines that were witnesses on Friday on the back a short-selling attack from Shadowfall. The research group is bearish on the publishing firm as they claimed that Future is a publishing group that has a collection of ‘low-quality’ and ‘sinking assets’. To shake off the attack from Shadowfall, Future announced today it expects full-year figures to top expectations.           

US

The Dow Jones as well as the S&P 500 have quickly crawled back a good chunk of the ground that they lost on Friday. Stocks started to rebound as soon as trading begun. The better than expected manufacturing reports assisted the positive movie. The final reading of the ISM manufacturing PMI was 51.9, which was an improvement on the 51.7 flash reading. The ISM manufacturing PMI report jumped to 50.9 – a six- month high. When you take into account the German manufacturing sector is contracting at a slower pace too it could be a sign the global manufacturing industry has turned a corner.  

Tesla shares hit yet another record-high as the bullish run continues. The company reported very impressive quarterly figures last week, and the bullish update is still playing on traders’ minds. The stock is up 12% at $731. 

Google’s parent, Alphabet, will be in focus tonight as the company will announce its fourth-quarter numbers. In October, the group posted total revenue of $40.5 billion, exceeding forecasts. It is worth noting that EPS for the period were $10.12, which was a big miss on the $12.42 forecast. The advertising stream at Google will be at the forefront of traders’ minds as that’s the powerhouse unit of Alphabet.

FX

The US dollar index us up roughly 0.5%, partly on account of the weakness in the pound, and partly on account of the respectable US manufacturing reports. The greenback has been largely on a positive run in 2020, but it came under pressure on Friday, so the economic reports are helping its prospects.

GBP/USD has been hit hard by the fear the UK will wind up in a no-deal scenario after the transition period ends. Prime Minister Johnson said he would walk away from talks with the EU if the trading bloc tries to get the UK to commit to following EU rules after the transition period has ended. Dealers are terrified of a no-deal-outcome, hence why sterling as slumped. On the bright side, the final reading of the UK manufacturing PMI reading was 50.0 – a nine month high, but the trade story has overshadowed the report.

EUR/USD is in the red on account of the rally in the greenback. This morning we had further proof the eurozone manufacturing sector has moved off its lows in terms of activity, as the final manufacturing PMI reports from Italy, France and Germany all showed improvements on the flash readings.               

Commodities

Gold has been hit by the move higher in the US dollar. The inverse relationship between the two markets is playing out today. In addition to the firmer US dollar, the gold market is under pressure from traders’ willingness to take on more risk. Dealers are pouring their funds back into stocks which has also hurt the metal.

WTI as well as Brent crude are in the red again as traders are fearful that China’s demand for the energy will tumble. Several of China’s industrial provinces are still on holiday as an attempt to stop the spread of the coronavirus, so the nation’s massive manufacturing sector is likely to suffer. It was reported that OPEC+ are considering cutting output, but that still couldn’t halt the decline.    

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