The FTSE 100 is heading for a higher finish, while the rest of Europe is in red.

Europe

The London equity benchmark is enjoying a broad-based rally as financials, consumer staples and industrials are in demand.    

Glencore shares are offside after the company posted strong profits, but they failed to meet analysts’ forecasts. First-half adjusted EBITDA jumped by 23% to $8.3 billion – a record- but the consensus estimate was $8.5 billion. The mining giant confirmed that net debt stood at $9 billion, and that was better than the guidance of between $10 billion and $16 billion. Cutting debt is a shrewd move as a more robust balance sheet should boost investor confidence in the long-run. The firm is facing an investigation by the US department of justice regarding activities in the Democratic Republic of Congo. The stock price could remain under pressure while the investigation is hanging over it.

Paddy Power Betfair shares fell as the lowered guidance overshadowed the respectable first-half figures. The gaming company expects underlying earnings to be between £460 million and £480 million, and that compares with the previous range of between £470 million and £495 million. The group confirmed that revenue for the six month period jumped by 7%, and the interim dividend was 67p, up from 65p. The government decision to greatly reduce the maximum stake on fixed-odds betting to £2 is not likely to have a ‘material impact’ on the company. The stock has been falling since May, and gapped lower this morning, and its outlook might remain negative.   

Prudential revealed a strong start to the year, and said the demerger of the UK division is going well. Group operating profit jumped by 2%, and the UK department saw a 4% rise in operating profit. The interim dividend was upped by 8%. The process of separating M&G Prudential remains ‘on track’.     

US

Markets had a muted reaction to China’s announcement that it plans to impose tariffs on $16 billion worth of US goods, starting on 23 August. The token retaliation from Beijing keeps the trade spat alive, and it seems like China were doing it to send a message, rather than to inflict financial pain on the US. China’s stock market is no longer the second-biggest in the world, while major US indices have their all-time highs in sight, and this underlines the difference between the two sides. Over the weekend, President Trump claimed the US is winning the trade war, and judging by the respective stock markets he does have the edge.

Telsa shares are slightly in the red after the CEO, Elon Musk, tweeted he is considering taking the company private last night. Mr Musk cited a $420 buyout price, and claimed the funding for the deal has been secured, but didn’t divulge any of the details. The firm’s board of directors confirmed they are giving the idea some consideration. 

FX

EUR/USD has been hit by the firmer US dollar and disappointing Spanish industrial output. The report showed that output jumped by 0.5% on a yearly basis, while economists were expecting an increase of 1.9%. To make matters worse, the May report was revised lower too. The single currency has been losing ground versus the US dollar recently and a break below 1.1510 could pave the way for further losses.  

GBP/USD is lower too as fears regarding Brexit negotiations persist. There hasn’t been any new news about the UK’s impending exit from the EU, but Liam Fox’s comments about the possibility of a ‘no-deal’ Brexit is 60-40 is weighing on the pound. Sterling dropped below $1.2900 – its lowest level since late August 2017. The slide in the pound against the US dollar since April has been relentless, and we haven’t seen any signs of it letting up.          

Commodities

Gold is lower on the day as the firmer US dollar has hurt the metal. Lately gold has been heavily influenced by the greenback, and dealers are dumping the metal on account of the rise in the US dollar. Gold has been in a downward trend since April, and given that it fell to a one year low last week, it would appear the bearish move is still intact.

WTI and Brent crude oil are in the red as the latest trade figures from China underlines the country’s relatively weak demand for the commodity. China’s appetite for oil is low by their standards. Trade tensions have taken another negative turn and this could keep pressure on oil. The latest Energy Information Administration report showed that US oil stockpiles fell by 1.35 million barrels, while gasoline inventories rose by 2.9 million barrels, and that caused the energy market to gap lower. 

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.