The mood in Europe is now a little bullish, after major indices were in the red this morning as dealers used cautious language in relation to the US president’s release from the medical centre as an excuse to book profits.

The move higher in US index futures in the middle of the European trading session lifted the sentiment on this side of the Atlantic. The US President is keen to get back to business, after all, he has an election to contest in a few weeks. Equity traders welcomed the news that the Donald has returned to the White House, but it is important to remember that doctors said he is not out of the woods yet. Market confidence is higher now but dealers will be monitoring the health of Mr Trump. 

Watches of Switzerland Group shares hit a record high on the back of the bullish update. The company upped its guidance, and that is something that is not too common these days. Annual revenue is expected to be between £800 million and £910 million, and keep in mind the previous forecast was £840-£860 million. The net debt guidance has improved too as the new guidance is now £80-£100 million, while the old guidance was for between £90 million and £110 million. The high-end jeweller confirmed that revenue in the first 10 weeks of the second quarter was just over £200 million, topping forecasts. During times of economic uncertainty, the mega-rich tends to fare better than the middle and lower income earners, and that has probably been a factor in the company’s solid performance recently.

Restaurant Group suffered greatly because of the pandemic, but things are up on the up as the post-lockdown performance has been encouraging. In the first half, the company confirmed that revenue dropped by 55% to £227.2 million. The group swung to a first half pre-tax loss of £47.5 million, and that was a big difference from the £28.1 million registered one year ago. The hospitability group is cautious in its outlook on account of the latest government imposed restrictions. Traders are likely to be weary of the stock because of the health situation is volatile and the risk of more localised lockdowns in the months ahead is very real. The company has decided to go down the restructuring route and it is in the process of closing between 36 and 41 outlets – the move should help free up capital for restaurants that are commercially viable.

Premier Oil shares saw a lot of volatility today. The oil and gas exploitation company will merge with Chrysaor. The move will see the London-listed company wind up with 5.45% of the new entity, while Harbour Energy, the main shareholder in Chrysaor, will control roughly 39% of the new company. Premier has been hobbling along for years and since the highs of 2014 – when Brent crude oil was above $100 per barrel – the stock has lost over 90% of its value. Chrysaor has been acquiring energy assets in the North Sea for a number of years now and seeing as it is private equity backed, it is well-funded.

Prime Minister Johnson pledged to help ‘generation rent’ to get on the property ladder by assisting first time buyers to obtain mortgages that only require a 5% deposit. Like yesterday, Redrow, Persimmon and Taylor Wimpey are up on the session.             

US

The S&P 500 is now in positive territory and it is showing a small gain, meanwhile, the NASDAQ 100 is fractionally lower, but it is off the lows of the day. US stocks posted solid gains last night on the back of the Trump health story but now the mood seems to be less overtly optimistic and more cautiously optimistic.  

Levi Strauss will post its third quarter figures after the closing bell. The company posted no so fashionable numbers in July, where second quarter revenue dropped by over 60% to $498 million. The firm was forced to close the doors of its stores for roughly 10 weeks because of the health emergency. Digital sales increased by 25%, but that failed to make up the difference from the loss of business on the high street. E-commerce sales accounted for 15% of total revenue. The loss per share for the three month period was 48 cents. 

Dollar Tree intends to hire more than 25,000 workers to cope with the busy holiday season. The discount retailer will most likely require additional staff to support its distribution centres. 

Credit Suisse raised their price target for Costco to $370 from $328. Barclays is bullish on the retailer too as they issued an ‘overweight’ rating for the stock.  

FX

Sterling is under a little bit of pressure as uncertainty in relation to the future UK-EU trading relationship still exists. The British negotiating team will host the EU delegation in the UK tomorrow for discussions, while will run until Friday, and then negotiations will move to Brussels next week. The UK still appears to be sticking to the self-imposed deadline of 15 October with respect to continuing on with the talks or not. It is understood that ‘big progress’ was made in the talks today, but more still needs to be achieved. GBP/USD is in the red, but it is off the lows of the session.  

EUR/USD is flat as there has been no major movement in the US dollar. Factory orders in Germany jumped by 4.5% in August, and that was the fourth consecutive month of quarterly growth. The July update was 3.3% so it is encouraging to see that things are picking up.        

Commodities

Gold has hit its highest level in over two weeks. At the end of September, the asset fell to its lowest level in two months, and it has been recovering since. In recent months, the gold market has typically been influenced by the moves in the dollar, and it would appear that the absence of a move higher in the greenback today has helped the metal.

Brent crude and WTI are building on yesterday’s gains as disruption to production in Norway and adverse weather in the Gulf of Mexico have pushed up the energies. Oil workers in Norway are on strike and that will curtail production. It was reported the industrial action will reduce production by 8% of the total output. Oil companies operating in the Gulf of Mexico have been removing staff from platforms in the region as a category 2 hurricane is expected to hit the region on Thursday.               


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