Optimism is on the rise ahead of President Trump’s speech at 5pm (UK time), where the US leader will set out his position on trade. 

Europe

Dealers are cautiously optimistic that Mr Trump will defer his decision to impose tariffs on EU vehicles. Car manufacturers in Europe have been fearful Mr Trump will give them the China treatment, but recently the sounds from the White House haven’t been aggressive in relation to the EU. The Donald is known to be unpredictable, so traders are not overly bullish on the likes of Fiat, Daimler or Volkswagen on the run up to the announcement.     

ITV confirmed that third-quarter total advertising revenue increased by 1%, which was at the top end of the company’s guidance. Over the nine month period, online revenue increased by 23%. The group said it is still on track to deliver savings of £220 million in 2019, while the studios unit is expected to see revenue growth of at least 5%, and the margin is tipped to be 14-16%. The Rugby World Cup boosted the group’s ratings, and the new instalment of Love Island will begin in January, so no doubt that ITV’s content will be in demand.

Vodafone shares are higher after the company upped its full-year guidance. The group now expects annual adjusted EBITDA to be €14.8-€15 billion, while the old guidance was €13.8-€14.2 billion. The upgrade to the outlook comes on the back of solid organic revenue growth of 0.7% in the second-quarter, and that was a big improvement from the decline of 0.2% in the first three months. The firm is benefitting from the acquisition of Liberty Global cable business in central and eastern Europe. The group outlook is positive as the firm is in the process of spinning off its towers business in order to pay down debt. The tie-up with Telecom Italia Group in terms of network sharing should benefit the company too as it will reduce it overheads. It seems like the company is getting a better handle on its debt situation.

According to Kantar Research, total UK grocery sales increased by 1% in the 12 weeks until early November. It’s the same old story with the UK supermarket sector as the big four firms continue to lose ground to Lidl as well as Aldi. Morrisons, Asda, Tesco and Salisbury’s saw sales fall by 1.7%, 1.2%, 0.6% and 0.2% respectively. On the flip side, Lidl posted an 8.8% increase in sales, while Aldi saw a rise of 6.7%. The rise of the deep discounters seems to be unstoppable, so the old guard will need to up their game in order to hold their own.      

US

The S&P 500 plus the NASDAQ 100 have set fresh record highs in advance of the Trump speech. The bull run continues on Wall Street as dealers are hopeful the US president will deliver a positive speech in relation to trade. It would be considered a win if Trump confirms the roll back of tariffs should phase one of the trade deal be signed, but realistically, he is likely to be more guarded in his message to China.  

Tyson Foods issued a mixed set of numbers. Revenue for the quarter increased by 9% to $10.88 billion, but it narrowly missed analysts’ forecasts. Net income tumbled to $369 million from $537 million. The group incurred losses in relation to a fire at slaughterhouse in Kansas. Excluding exceptional items, the EPS were $1.21, while traders were expecting $1.29. The incident in Kansas coincided with China’s increase in demand for pork due to the swine flu epidemic, so the group missed out on potential business.  

D.R. Horton shares are higher on the session on the back of posting solid fourth-quarter figures. Revenue increased by 11.7% to $5.04 billion, which topped forecasts. EPS was $1.35, and the consensus estimate was $1.25. Home sales and new orders increased by 9.2% and 14.1% respectively. The group’s guidance exceeded dealers’ forecasts too, so overall it was an impressive report. 

FX

The broader push higher in the greenback has dented EUR/USD as well as GBP/USD. The German ZEW economic sentiment reading came in at -2.1, which was a big improvement on the -22.8 in October. Today’s update was the best in six months, but the fact it is still negative is concerning. It was one step forward, and one step backwards for the UK jobs market. The unemployment rate edged lower to 3.8%, from 3.9%, but the average earnings excluding bonuses dipped to 3.6% from 3.8%. Overall, the UK labour market is in rude health as wages are still higher than CPI rate of 1.7%.   

Commodities

Gold is lower again as the bears seem to be in control of the metal. It reached a six year high in September and since then it has been drifting lower. It hit a new three month low. The push higher in the greenback has hurt the metal as the inverse relationship between the two is strong. Should gold fall further it might retest the 1,430 area.

WTI and Brent Crude are showing modest gains as traders are cautiously optimistic about Trump’s planned announcement, in which he will cover trade as well as economic policy. Last week there were conflicting reports about whether the US and China will scrap tariffs that were imposed on each other in September, should phase one of the trade deal signed next month. The energy market has been pushing higher since early October but it seems as if traders don’t want to get overly bullish as the trade situation could turn sour.    

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