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European markets shrug off Russia headlines

Despite weekend events in Russia, European markets have proved to be reasonably resilient, although we did see the DAX sink to its lowest levels this month, and the FTSE 100 fall near to three-month lows in early trade. 


The early weakness proved short-lived, with markets recovering towards break-even levels in the afternoon session. If there is concern about how events in Russia might play out, the view appears to be let’s worry about it when and if it happens, rather than worry about what might happen. 

A rebound in crude oil prices appears to have helped give a lift to the UK benchmark, with energy higher, although there have also been some other notable outperformers. Luxury car maker Aston Martin is having a solid day after announcing a deal with Saudi based Lucid Motors, to implement electric vehicle technology for its powertrains. Aston Martin said it would be paying £182m, as well as Lucid getting a 3.7% stake in the UK carmaker. Aston Martin also extended its co-operation agreement with Mercedes-Benz, which it uses for the engines for its DBX and DB12 sports cars. 

Housebuilders are seeing a modest rebound today on the back of an update by Peel Hunt that suggested now might be a good time to buy, with some of the shares fairly cheap on a valuation basis. 

Primark owner Associated British Foods shares have slipped back despite the company uprating its full-year guidance after announcing Q3 revenues of £ 4.72bn, with the food business showing resilience across all areas. Total food revenue rose by 18% to £2.7bn, while the Primark business saw revenues rise by 13% to just shy of £2bn, helped by strong performance across all its regions. Like-for-like sales in the UK for the quarter rose by 6%, and 7% in Europe. Total revenue year to date has increased 17% to £14.29bn, with operating profits for the current year expected to come in moderately ahead of last year. 

Still in retail, Frasers Group is higher after increasing its stake in electrical retailer Currys to 10.39%, as well as increasing its stake in AO WorldUK banks are slightly softer over concerns about the health of the UK economy, with JPMorgan downgrading Lloyds Banking Group.    


Having finished last week on the back foot, US markets are once again lacking any conviction with a slightly lower open, as we come to the end of what has been a positive month and quarter for US markets. 

On the earnings front, Carnival Cruise Lines is lower despite reporting a better-than-expected Q2 loss of $0.31 a share, and a more upbeat outlook for the rest of the year. Adjusted net losses came in at $395m, as revenues rose to $4.91bn, a decent increase from the $4.43bn seen in Q1, and above forecasts of $4.75bn.

Occupancy rates also rose sharply, with booking levels hitting a record high for future sailings. The shares have seen some solid gains over the past few weeks in anticipation of a decent set of numbers, so today’s pullback could merely be a case of some investors cashing in some profits. For the full year, it says it expects to see adjusted EBITDA of between $4.10bn and $4.25bn, an increase of $175m. Consensus estimates are for Q3 revenues to come in at $6.5bn, and a return to profit of $0.77 a share.  

Electric car maker Lucid Group has seen its shares rise sharply on the back of the Aston Martin deal, while Tesla shares have slipped back after yet another broker downgrade, this time from Goldman Sachs.

In M&A news, IBM has said it is paying $4.6bn to acquire software company Apptio from private equity company Vista Equity.


The US dollar has found further progress slightly more difficult today although there has been little in the way of significant drivers.

The Norwegian Krone is among the strong performers as traders bet that rates there could rise a lot quicker than originally priced, with a peak of 4.25% predicted in the next three months. Firmer oil prices have also helped, pulling it away from three-week lows.

The euro is also edging higher ahead of this week's ECB conference being held in Sintra in Portugal, as traders weigh up whether the governing council will be able to coalesce around a position which will allow them to raise rates by as much as they are promising.   


Oil prices have edged slightly higher after this weekend’s events in Russia, due to its position as a key oil and gas producer. The prospect that we might see supply disruptions if the geopolitical situation deteriorates further has prompted some precautionary buying. While the crisis appears to have passed quickly the fact that it happened at all has been a bit of a wakeup call.

Gold prices have edged higher in the wake of the weekend events, despite closing last week at its lowest levels since early March, as the yellow metal got a slight haven bid.  

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