The FTSE 100 is on track to post a modest gain as the close of trading draws near, with the major equity markets in continental Europe mixed.

Overall, there hasn’t been too much excitement in the markets today. Restrictions in some countries, because of the health crisis, are tighter and with the way things are going in terms of the number of new coronavirus cases, there are fears that further restrictions could be in the offing.

The standoff between the UK and the EU hasn’t really changed, in that, discussions haven’t collapsed, but there hasn’t been any major progress either. It is not too dissimilar to what is going on in the US with respect to the planned Covid-19 relief package. Differences remain between what Nancy Pelosi, of the Democrats, wants and what treasury secretary, Steven Mnuchin, desires.         

UBS shares hit their highest level since mid-September on the back of its third quarter update. Pre-tax profit in the three month period jumped by over 90% to $2.6 billion – the strongest quarterly metric in a decade. Net income surged by 99% to $2.1 billion, and that smashed the $1.5 billion that equity analysts were anticipating. UBS earmarked $1.5 billion for the share buyback scheme next year. The investment banking business outperformed as pre-tax profit rose by 268%, and the wealth management business posted an 18% increase in profit.          

Reckitt Benckiser was one of the benefactors from the Covid-19 crisis as there was a jump in demand for hygiene products. The company revealed a 9.5% increase in third quarter revenue to £3.5 billion. On a like-for-like basis, revenue jumped by 13.3%, and for the year, the company expects ‘low double digit’ growth. The hygiene unit saw growth of almost 20%. Reckitt’s productivity plan has resulted in £300 million in cost savings, and its strong performance this year should help the company achieve its rejuvenation plan one year ahead of expectations.

Bellway, like other house builders, was forced to stop construction work amid the pandemic. On an annual basis, house completions were 7,522, a decline of 30.9%. Revenue dropped by just over 30% to £2.22 billion, and pre-tax profit tumbled by almost 65% to £236.7 million. Bellway scrapped its dividend in March on account of the health emergency, a move that was very common. Today, the company announced that it will resume the pay-outs, and the final dividend will be 50p – the firm intends to increase the pay-out in time. 

Boohoo.com Ltd shares are in the red on the back of a story that a number of major auditors will not be bidding to be the auditor for the fashion house. It seems the reputational damage incurred by the controversy connected to the third party suppliers has prompted companies to distance themselves from Boohoo. 

US

Stocks have pulled back some of the ground that was lost last night. The selling pressure was ramped up yesterday for fear that US politicians would not agree on a stimulus package by today. There isn’t a huge amount of hope for a deal but it seems that bargain hunting is taking place.   

Procter & Gamble (P&G) had a strong first quarter. Revenue increased by 9% to $19.32 billion, topping the $18.38 billion consensus estimate. EPS was $1.63, and that easily exceeded the $1.42 that equity analysts were expecting. The fabric and home care unit – which includes cleaning products – was the best performer as organic sales increased by 14%. The beauty unit saw a rise of 7% in sales. Not only did P&G have a robust first quarter, the group also upped its full year outlook. It now expects annual organic revenue to be 4-5%, while the previous forecast was for between 2% and 4%. The consumer goods company will spend between $7 billion and $9 billion on share buybacks, and keep in mind it previously said it would spend $6-$8 billion.

IBM shares are share in the red in the wake of the third-quarter update. Revenue dipped by 2.5% to $17.56 billion, fractionally ahead of expectations. EPS was $2.58 – in line with analyst forecasts. The cash flow rate fell to $1.1 billion, the lowest in a decade. The group’s technology services business, is the largest department by revenue, and it posted a 4% fall in revenue.  

Netflix will be in focus as it will publish its third-quarter figures after the closing bell tonight. In the first six months, the group added 25.8 million new subscribers, and keep in mind that it added 27.8 million in 2019, so traders will be wondering if the rate will taper off. Analysts are expecting 3.3 million new subscribers for the three-month period.     

FX

The US dollar index is in the red again – it has fallen for a third day in a row. The greenback enjoyed a rebound between early and late September, when it hit a two month high, but since then it has been pushing lower. Traders are wondering whether it is undergoing a pullback or if it has further ground to lose.

EUR/USD and GBP/USD has been helped by the dip in the US dollar. It has been a quiet day in terms of economic announcements from Europe. The EU’s Michel Barnier, told the UK’s chief negotiator, David Frost, that the door remains open. When it comes to the UK-EU talks, it is the same old story, as there is no major progress.            

Commodities

Copper hit its highest level since June 2018. It was reported that China’s refined copper output jumped by over 10% last month, on an annual basis. The country is the largest importer of copper in the world, and the recent GDP and industrial production numbers point to an uptick in the recovery.

Gold continues to experience low volatility. It is dancing around the $1,900 mark. In the past week, the yellow metal has traded in a relatively small range recently. Lately, gold has typically benefitted from a dip in the US dollar, but that’s not the case today.

Brent crude and WTI are lower as there are concerns that tougher restrictions will bring about lower demand for the energy. In addition to that, there are worries about oversupply seeing as Libya is raising its production – it is understood that the Sharara oil field is now operating at roughly half its production.   


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