Sentiment has improved somewhat in light of President Trump’s softer stance regarding Syria.

Europe

The US president stated that an attack on Syria may not be imminent, and this has assisted with investor sentiment. Geopolitical issues have been heating up this week, but for now they appear to be cooling a little.

FirstGroup shares have popped higher today after it rejected a takeover approach from Apollo. The transport company stated the bid ‘fundamentally’ undervalued the company and was ‘opportunistic’. The board of the transport company unanimously knocked back the offer, which shows us how much they oppose the move. FirstGroup has been struggling in recent years, and profit warnings have been common. If the senior management are keen to keep control of the company, they need to up their game as shareholders will want to see a better performance.

Dunelm shares are up 8.6% today after the company announced a 5.1% rise in third-quarter sales.  The company is embracing ecommerce, with the result that online sales growth jumped by 35.7%. Dunelm hopes to have higher margins in the last quarter, and sales during the festive period weighed on Q3 margins. The company is performing well in a tough environment, and it plans to open more stores later this year.

Carpetright took another knock today after the company stated it intends to enter a Company Voluntary Agreement (CVA) – which it needs the approval of its creditors to do so. The very mention of a CVA sends out a negative image, and investment sentiment has soured. Carpetright is planning on closing 92 stores which will result in 300 job losses, but the restructuring is necessary if the company wants the CVA approved. 

Shares in Norwegian Air Shuttle have soared after it was reported that IAG have acquired a 4.61% stake in the company. There is speculation the move could lay the groundwork for a takeover attempt. Higher costs and rapid expansion have left the Norwegian air carrier a little stretched, so the takeover chatter might hang around for a while.

Micro Focus shares were jolted higher after it was reported that Elliott Management acquired a stake in the company. The stock has given back about half its gains, but it still up 7.8%.

US

Stocks are higher today as tensions regarding the Middle East have cooled. President Trump announced that an attack in Syria was not ‘imminent’, and dealers are taking this as a cue to snap up relatively cheap stocks. Mr Trump has slightly backed down from yesterday’s warning to Russia that a military assault was in the pipeline. Investors are mindful the situation is far from over, but for now they are content to stay long.   

US jobless claims dropped to 233,000 from 242,000 last week, while was only slightly ahead of the 230,000 that economists were expecting. Last month, the jobless claims rate fell to its lowest level in over four decades, so they jobs markets is still healthy. 

Last night’s minutes from the Federal Reserve are still resonating with traders. The update showed that policymakers predict higher inflation and growth rates, and the talk of four rate hikes in 2018 is back doing the rounds.

There is talk on Wall Street that a deal on the North American Free Trade Agreement is close, after President Trump was alleged to have said it yesterday. 

FX

Minutes from the latest European Central Bank (ECB) meeting were a little on the dovish side. There was broad agreement of is insufficient evidence for sustained inflation, and risk was tilted to the downside. The update put pressure on EUR/USD. The euro has enjoyed a positive run against the US dollar recently, so today’s ECB update prompted some profit-taking. 

GBP/USD is a touch higher against the US dollar. The only UK economic announcement during the session was the Bank of England credit conditions survey, which showed a drop in unsecured credit availability. This indicates a lower risk appetite, and is positive for the British economy, as a high level of unsecured debt can be damaging to households.

Commodities

Gold has been hit by profit-taking from yesterday’s surge, and the firmer US dollar is adding to its woes. Saudi Arabia intercepted missiles from Yemen yesterday, and that prompted gold to hit a level not seen since late January, and now that the dust has settled traders are exiting gold. The slight tick higher in the US dollar is adding to the pressure on the greenback.

WTI and Brent Crude oil retreated from yesterday’s multi-year high. Profit-taking set in after the oil market reached its highest level in over three years yesterday, on the back of the news that Saudi Arabia intercepted missiles from Yemen. The Saudi’s are major oil producers and any concerns about supply is likely to keep the price high.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.