The mood is broadly positive when it comes to the US-China trade relationship, which is why European equity markets are largely higher this afternoon.

Europe

There has been a lot of talk about Washington DC and Beijing edging towards signing phase one of the trade deal, but the Chinese government are now pressing the US to drop the tariffs they imposed in September. It is a big ask from Beijing, but markets have held up relatively well considering. Recently we have heard that progress has been made in relation to China’s position on intellectual property rights as well as the yuan, so things are heading in the right direction.  

Marks and Spencer shares are a little higher today as the food department performed well. Food sales increased by 1.2%. The division always been the stronger component of the group, so when food is outperforming, it bodes well for the company. Traditionally, the clothing and home department have held M&S back, but sales improved in October, so there is positive momentum heading into Christmas. The organisation is undergoing a restructuring scheme, and the clothing and home division is at the low-point of the turnaround, so traders are looking to an improvement in trading in the quarters to come. First-half revenue and profits slipped by 2.1% and 17% respectively.

Intu Properties confirmed that it was ‘likely’ to raise new capital to bolster is balance sheet. The REIT has major exospore to the retail sector, which has been hit hard. The rise of online shopping combined with a more fragile consumer climate has hurt traditional retailers, which has rippled out to Intu as insolvencies has hurt the group. The property group is already in the process of selling two assets in Spain, but it is considering other options to raise funds. The shares price is close to a record-low, so sentiment is clearly sour, so an issuance new of shares is likely to put further pressure on the price.      

Tyman shares are in demand after the group said that full-year operating-profit will be ahead of the 2018 level. Traders were impressed with the guidance, but trading continues to be subdued. The British as well as the Continental markets are ‘challenging’, while the business in North America appears to be flat lining. The outlook for the housing market in Europe isn’t too hot, so Tyman are likely to put in a mediocre performance in the medium-term.  

Virgin Media have switched their mobile contract to Vodafone from BT Group, and there has been a sell-off in the latter’s shares, while the formers haven’t moved much.

US

The major US equity benchmarks are all a little lower as the bulls have taken a breather. The Dow Jones hit an all-time high yesterday, but today it has drifted lower. It was reported that China want the Trump administration to row back on the tariffs that were introduced in September. Donald Trump loves having the stock markets close to record highs but he can’t be seen to be soft on China, so this issue might hold up the talks. 

Uber is in focus today as the company’s lockup period has expired, so employees of the company are allowed to sell their shares. Seeing as the stock tumbled to an all-time low today, traders will be wondering whether workers with large shareholdings will be getting nervous and keen to cash in some of their chips. We have seen some crazy IPO valuations this year, but in light of the WeWork fiasco, there is a feeling that traders have their eyes wide open now, so Uber’s stock price could be in for further pressure. Should senior management make a break for the exit in terms of their shares, it would be a good look for the firm.

CVS shares are higher on the back of solid third-quarter results. Net income in the three month period increased by 10%. Adjusted EPS came in at $1.84, which topped the $1.77 forecast. Revenue was $63.81, which also topped estimates. The firm upped its full-year guidance to $6.97-$7.05, from $6.89 to $7. It was an impressive set of figures all round, so it is no wonder the stock hit a seven month high. 

FX

EUR/USD is a little higher on the back of the pullback in the US dollar. Major eurozone economies released the final reading of their October services PMI reports. The reports were nothing to get excited about, but the Italian as well as the German readings showed slight improvements on the flash readings. Eurozone retail sales grew by 0.1% in September on a monthly basis, which underlines the subdued state of the region, but at least it topped the 0.0% forecast.

GBP/USD has barely moved today as traders have shrugged the political talk. Prime Minister Johnson launched the Conservative Party’s campaign for the election next month, but it has made little impact on the pound.  Recent polls have put the pro-business and pro-Brexit Tory party in the lead.        

Commodities bas

Gold has clawed back some of the ground it lost in the past couple of trading sessions. The metal has been range bound recently. The $1,473 - $1,520 area has captured a lot of trading range in recent months. The metal has usually declined when stocks have soared, but it is holding up remarkably well considering the strength in global stocks.

Oil was pushed lower by the latest Energy Information Administration report. The update showed that stockpiles jumped by 7.92 million barrels, while traders were only expecting a build of 1.51 million barrels. The move was cushioned by the fact that gasoline inventories fell by 2.82 million barrels. It was recently announced that major OPEC producers don’t want further cuts to output, which is likely to weigh on the oil market too.   

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