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Stock markets are mixed today as traders had a muted reaction to the historic meeting between Donald Trump and Kim Jong-un. 

Europe

The summit is, however, a step in the right direction for global politics. Reports about the timeline of North Korea scaling back its nuclear programme have been vague though, with the long-term goal of complete denuclearisation on the Korean peninsula.

Boohoo shares are largely unchanged today even though the firm issued an impressive trading update. First-quarter revenue jumped by 53%. The UK division reported a 49% jump in revenue, while the international department saw sales rise by 60%. The online retailer issued a bullish outlook too, and it predicts earnings growth of 35-40%. The company’s distribution centre at Burnley is undergoing an expansion, and Boohoo confirmed the plans are on track. The aim is to be able to facilitate £3 billion worth of global sales from the premises. The share price has been rising since April, and if the positive move continues it could target 225p.

New Look are still finding trading tough, and the company revealed a 7.3% fall in revenue and an operating loss of £74.3 million. In March, the retailer entered into a company voluntary arrangement (CVA) to give itself some much-needed breathing space. High Street shops are struggling, and this is partially down to the rise of online retailers such as Boohoo.

Crest Nicholson shares are in the red because the firm revealed a 13% rise in revenue but a 2% fall in pre-tax profit. A jump in building costs were cited for the drop in profit, but the home builder confirmed that costs are stabilising. Operating margins declined from 19.1% to 17.2%, and the company anticipates full-year operating margin to be roughly 18% – at the lower end of the latest guidance. The share price reached a record high in May 2017, but has been in decline since then, and if the bearish trend continues it could target 400p.

US

Equity markets are lacklustre in the wake of President Trump meeting the North Korean leader Kim Jong-un. The long-awaited meeting took place in Singapore and it has been largely well received from a political point of view. Some critics pointed out it was lacking details about what the next steps would be. As far as traders are concerned, the first hurdle has been cleared, and they await the next round, whenever that will be.

US CPI ticked up from 2.5% to 2.8% in May, which topped economists’ estimates of 2.7%. The core CPI rose also to 2.2% from 2.1%. The reports show a healthy increase in demand. The Federal Reserve will welcome these figures, as it suggests consumers are willing to spend. The Fed meeting tomorrow will be closely watched as traders will be looking for clues as to what the policy will be at the back end of the year. The US central bank hiked rates three times in 2017, and there is speculation we will see four rate hikes in 2018.

FX

GBP/USD drifted lower after UK wages cooled in April. Average earnings excluding bonuses came in at 2.8%, down from 2.9% in March. Sterling slid against the US dollar on the back of the news, as traders feel it makes an interest rate hike from the Bank of England less likely. The UK unemployment rate held steady at 4.2%, meeting estimates, but that failed to prop up the pound. MPs will be debating the EU withdrawal bill in the House of Commons, and voting will follow.

EUR/USD is a touch higher today despite the disappointing economic update from Germany. The ZEW economic sentiment report fell from -14 to -16.1 in June. It is concerning that investor sentiment is slipping in the largest eurozone economy.

Commodities

Gold continues to experience low volatility as traders await the Fed update tomorrow. The metal is hovering around the $1,300 mark, and until we hear what the US central bank has to say, it is unlikely to move much in either direction. A break above $1,307 – the 200-day moving average – could send the market to $1,326.

WTI and Brent Crude oil haven’t moved much today as dealers are fixated on the OPEC meeting later this month. There is talk that Russia and Saudi Arabia will increase output, and this has scared away the bulls. The oil market reached a multi-year high last month, but volatility has dropped off since. It appears that traders are playing the wait-and-see game. 

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