market relief

Stock markets are in positive territory as we approach the close.

Europe

Investors are still in buying mode as there has been no update regarding the trade dispute. Investors are using the relatively quiet period in terms of newsflow as an opportunity to buy into the market.  

Ocado shares endured a volatile session today after the company revealed an average set of full-year figures. Revenue jumped by 12.1%, however EBITDA dropped by 13.9%. The group swung to a loss of £9 million when you take into account depreciation, impairments, amortisations and net finance costs. Revenue grew on account of client acquisition, but the average basket size slipped by 0.2%. The company expects the second-half to be stronger than the first, and capital expenditure guidance remained at £210 million. The stock has been in an upward trend for two years, and if the positive move continues it could target the 1,140p area.

Cambian Group shares surged after the company received a takeover offer from CareTech Holdings. The firm are offering 220p per share for Cambian, which is a healthy premium on yesterday’s closing price of 148.2p.

TP ICAP shares plunged today after the company declared the departure of CEO John Phizackerley, and warned that earnings per share will be below equity analysts’ expectations. The interdealer broker is dealing with higher costs, such as the integration of ICAP, and the firm is also facing increased expenses relating to Brexit and MiFID II. The stock fell to a level not seen since December 2014 on the back of today’s announcement.

US

Stock markets are in positive territory as buying appetite continues. The Russell 2000 is on a roll as the small cap index reached a new all-time high. Traders are cautiously optimistic regarding the state of global trading relationships. Traders are also getting ready for the latest earnings season, and it is drawing attention away from the trade spat.

PepsiCo shares hit a four-month high today after the company posted respectable second-quarter results. Earnings per share were $1.61, while economists were anticipating $1.52. Revenue was $16.09 billion, which was slightly ahead of the $16.04 billion that traders were anticipating. The company had a strong performance in Asia, Latin America and North Africa, while the North American division underperformed.

FX        

GBP/USD bounced back after the severe sell-off yesterday on account of the political uncertainty surrounding Prime Minister May. Today’s upward move is likely to be driven by short covering, and it is worth noting the political situation in the UK is still fragile. There were a number of economic announcements from the UK today. The construction output update easily topped economists’ forecasts, while the industrial and manufacturing output reports undershot forecasts.

EUR/USD is suffering on account of the bounceback in the greenback. Today has been a quiet day in terms of economic updates from the eurozone. Italian industrial output increased by 0 7% in May, while the consensus estimate was 0.8%, and the April report was revised to -1.3% to -1.2%.

USD/CAD is creeping higher despite the firmer-than-expected Canadian housing starts. The latest report showed an increase of 248,100, while economists were anticipating 210,000. The broader push higher in the greenback took precedence over the Canadian dollar.

Commodities

Gold has been nudged lower by the firmer US dollar. The commodity has been in a downward trend since April, and if today’s bearish move continues it could retest $1,236. The inverse relationship between gold and the US dollar has been strong lately, and if the greenback gains further ground it could put additional pressure on the gold market.

WTI and Brent Crude were higher today as traders remain concerned about supply levels. There are supply issues in Canada and Libya, and strikes by oil and gas workers in Gambon and Norway, and this added to the upward move.

It was recently reported that the US secretary of state, Mike Pompeo, confirmed the government will consider requests from a ‘handful’ of countries for relief from US sanctions for buying oil from Iran beyond November. This triggered some selling on the oil market.

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