European equity markets are a mixed bag today as there has been no major change to the global political or macro-economic environment.
Volatility is low across the board as there hasn’t been much in the way of corporate news stories.
Ocado shares are lower on the day after the online grocer stated that costs rose. Third-quarter sales jumped by 13%, average weekly transactions increased, but the average order size slipped slightly. The company stated it hasn’t felt the impact of Amazon on its business yet, but I suspect the very mention of the American online retailer left investors feeling uneasy. Amazon will have access to the UK food market via its acquisition of Whole Foods, and at a time like this, the last thing Ocado needs is rising costs.
The GBP/USD has bounced back today after a sell-off yesterday as Mark Carney, the Governor of the Bank of England, wasn’t as hawkish as traders were expecting. The head of the BoE said rate hikes will be ‘gradual’ and ‘limited’ and that may not have been as aggressive as some dealers would have liked to hear, but the market is now paying attention to what he said. The pound has been gaining ground versus the US dollar since January, and the momentum has been picking up recently.
The Federal Reserve starts their two day meeting today, and tomorrow we will get their decision. Traders are not expecting any change to the interest rate, but we are likely to hear about the balance sheet reduction. Opinion is still divided over whether the Fed will hike in December or not, and the statement and press conference tomorrow will hopefully shine some light on the situation.
The disruption and destruction caused by Hurricane Harvey and Irma combined with the debt ceiling looming, and the uncertainty over what the Fed make up will be, will make it unlikely that the US central bank hike in December.
We are expecting the Dow Jones to open 30 points higher at 22,361, and we are calling the S&P 500 up 3 point at 2506.
At 1.30pm, the US will announce housing starts and traders are expecting a reading of 1.17 million for August, and that compares with 1.15 million in July. At the same time, the building permit numbers for August will be released, and the consensus is for them to remain steady at 1.22 million.
Fedex and Bed, Bath and Beyond will announce their first-quarter and second-quarter figures respectively later today.
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