Stocks are largely positive heading into the close of the trading session. 

Europe

The US-China trade story continues to be at forefront of traders’ minds as discussion took place yesterday. Neither side wants to be seen as very eager to reach a deal, but the fact that talks took place is a positive step. President Trump continues to claims that China are keen to make a deal, even though Beijing said overnight they are not as desperate to reach a deal as the US think. The fear surrounding the Saudi attack has simmered down, which has added to the positive move.

Metro Bank shares traded higher after Davis Selected Advisors announced they hold a 5.33% stake in the company, but the stock is now in the red. The share price is down over 80% year-to-date, as an accounting error caused the company to underestimate its loan exposure, which prompted the group to raise £375 million from shareholders. Adding to that, the regulator, the FCA, is investigating senior management whether they misled investor in relation to the financial health of the company. Davis are taking on a lot of risk as confidence has been knocked in the company, but the stock recently hit a record-low, so it seems as if they are barging hunting.        

Thomas Cook continue to have funding problems as the company has already agreed the terms of the £900 million rescue package, so today’s confirmation that it requested an additional £200 million in funding has rattled investor confidence. The company is lurching from one funding crisis to another, which is why some traders are cautious about buying into the group, in case another round of funding is required.

Rolls Royce said the problems it has with the Trent 1000 engines will last longer than initially thought. The issue has held the company back throughout 2019. Earlier in the year, the problems were an issue for more than 40 aircrafts, while now the firm said it will impact fewer than 10 aircrafts. The additional delay put pressure on the stock, but at least Rolls Royce maintained its guidance, which cushioned the bad news to an extent.

RBS announced that Alison Rose will be the next CEO of group, Ms Rose currently is runs the commercial and private banking division. RBS has undergone major restructuring in recent years, which has prompted the finance house to get back to basics, which ties in nicely with Ms Rose’s experience.        

US

It is a quiet day in term of US economic reports and company reporting, but the optimism in relation to the US-China trade story has given equity markets a little lift. The Dow Jones and S&P 500 are above 27,100 and 3,010 respectively, so both markets are not too far from their all-time highs. Traders are cautiously optimistic about the trading relationship between the two largest economies in the world but some dealers would like to see further progress made before committing to additional buying of equities.

FX

GBP/USD has seen Brexit fuelled volatility in the session. Earlier in the day, the pound pushed higher on the back of the comments from the EU’s Jean Claude Junker, who said he was open to dropping the backstop as long as the UK could offer a solution. Sterling’s positive move didn’t last long after the Dublin government said the ‘mood music’ has improved, but they are ‘not close to a deal’ at the moment. The pound has dropped, but it still has made an impressive recovery from the start of the month.

USD/CAD is higher on the session thanks the Canadian retail sales update. In July, retail sales in Canada increased by 0.4%, which undershot the 0.6%, which boosted the greenback versus the Canadian dollar.

Commodities

Gold continues to be hang around the $1,500 mark, as volatility in the metal is still low. The metal hit a six-year high earlier this month, but since then has undergone a sizeable pullback, and now continues to trade around the $1,500. Global stock markets are in good shape, which doesn’t bode well for gold as the metal typically rallies when equities tumble.  

Oil prices are higher today as traders are still concerned about supply levels in the wake of the Saudi attack last weekend. The energy market has seen major volatility this week. It seems the move at the start of the week was over down to the upside, and the subsequent move lower was overdone to the downside, so now we are seeing normality return to the market.   

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. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.