Stock markets are in the red as investors are still worried about the political sentiment in the UK and Italy.
Europe
Massive political uncertainty still hangs over Theresa May. Political commentators are questioning Mrs May’s ability to sell the withdrawal agreement to her own party, and a failure to do so could lead to a no deal scenario – which has spooked investors. The political fight between Italy and the EU is taking a backseat to Brexit right now, but make no mistake, another round of the eurozone debt crisis could be in the offing.
Kier Group announced it is on track to achieve its full-year target. The firm introduced a cost cutting scheme in July, and the process will involve selling non-core assets, and the aim will be to save roughly £10 million in the first-half of next year. The collapse of Carillion was a wake-up call for the group, and now they are looking to trim down its size. The stock has been in decline since March 2017, and if the bearish move continues it might target 800p.
Royal Mail have been hit by a price downgrade from Credit Suisse. The Swiss bank lowered their price target for the stock to 301p, from 339p. It comes as no surprise as the Royal Mail revealed disappointing numbers yesterday. Adding to the pressure on the stock, is the chatter about a possible general election. The Labour Party have suggested they would renationalise the firm, and that is weighing on investor confidence too.
The tobacco industry has been in focus for the past day after the Food and Drug Administration (FDA) confirmed they are going to restrict the sale of the majority of flavoured e-cigarettes to age-restricted stores in a bid to deter minors from taking up the habit. The FDA are going to try and ban menthol cigarettes too. British American Tobacco is lower again today.
AstraZeneca shares are in the red today after the company confirmed that one of its cancer treatment products failed to deliver the results they wanted. The update from the drug company prompted BMO and JP Morgan to cut their price targets for the stock.
US
The major equity markets in the US are mixed as traders are a little uncertain which way to look. The trade stand-off with China continues, and even though Beijing have outlined some possible concessions, the two sides are still at odds with each other. The G 20 summit later this month will be in focus as meetings are lined up, and that could provide the break through to the deal lock.
Nvidia sold-off today after the company announced underwhelming third-quarter results last night. The earnings per share were $1.84, which easily topped the forecast of $1.71. Revenue for the period was $3.18 billion, which undershot the forecast of $3.24 billion. The forward guidance rattled investor confidence, and the firm expects fourth-quarter revenue to be $2.70 billion, while one company was expecting it to be $3.40 billion. The stock has endured an aggressive decline since October, and if the negative move continues it could target $175.000
FX
The US dollar index has handed back some of yesterday’s gains. Political tensions in Europe aren’t as high as they were yesterday, and we have seen funds flow out of the US dollar. At the start of the week, the US dollar index reached a 17 month high. The chatter about the Federal Reserve sticking to their plan to hike rates is still doing the rounds, but Richard Clarida, of the Federal Reserve, stated that policy is getting closer to the vicinity of neutral, and he also cautioned that there is some evidence the global economy is slowing.
GBP/USD has clawed back some of the ground that it lost yesterday as the political mood has simmered in the UK. Theresa May’s government endured major upheaval yesterday, but at least her positioned hasn’t weakened further. The dust has settled for now, but dealers remain on edge, and while the pound remains below the 1.3000 mark, its outlook is likely to remain negative.
EUR/USD is higher on the back of the dip in the US dollar. The steady inflation figures from the eruozone assisted the euro too. The annual CPI rate in October remained at 2.2% - meeting forecasts, and the core report also held steady at 1.1%.
Commodities
Gold has driven higher today on the back of the weak US dollar. Recently the metal has caught a bid when the greenback has been soft, and today is no different. The uncertainty surrounding global stock markets is making gold more attractive as traders seek out safe-haven assets. If the metal pushes higher, it could target $1,243.
Oil is higher today on the report that OPEC and its partners will cut supply by 1.4 million barrels per day in a bid to curb the oversupply issue. The major oil producers will meet in Vienna in early December, and they are keen to put an end to the intense sell-off that has happened in recent weeks.
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