Sentiment in Europe is positive on reports that China are open to the idea of striking a partial trade deal with the US. 

Europe

It is believed that Beijing are willing to increase their purchases of US agricultural goods, in exchange for no additional tariffs from the US – levies are planned for this month as well as December. Traders are buying back into stocks as the news from China lays a slightly upbeat foundation for the trade talks that will take place tomorrow. The gains in stocks might be limited as it was also reported that China are still unwilling to compromise on big issues. The Trump administration have concerns about Chinese government subsidies, and Beijing have recently stated they are unwilling to bend on the issue. Hopes have been raised a little, so dealers are using any excuse to snap up stocks.            

GVC shares are higher today after the group raised its full-year profit outlook to £670 million - £680 million, while the old guidance was £650 million - £670 million. The same trends are playing out at GVC, whereby retail revenue dropped by 18% as the high street suffers, but the online side of the business saw a 12% increase in revenue. The gaming industry is likely to see more business go online, which is why William Hill revealed plans to close a raft of stores in recent months. Last month, GVC launched a joint venture with MGM as it wants to gain market share in the US. Tougher regulation in countries like to UK has promoted many European firms to expand in the US in light in the deregulation.

Takeaway.com confirmed that total orders in the nine month period jumped by 75%, which was largely fuelled by acquisitions. The CEO, Jitse Groen, said the group will ‘continue to prioritise growth over profits, the company is now EBITDA positive in both the Netherlands and the Germany’. The firm announced in August that it was merging with Just Eat Group, and their shares are slightly higher today.         

US

The major US indices are higher on news that China would consider a partial trade agreement. The two side will resume trade negotiations tomorrow, so the fact that China are pivoting towards even a small compromise has lifted sentiment.

The Fed will release the minutes from the September meeting at 7pm (UK time). Last month, the US central bank cut interest rates, but the language used in the statement wasn’t overly dovish. Jerome Powell, the head of the Fed didn’t drop any major hints about more rate cuts in the near-term, but traders will be keen to read the finer detail as to why the Fed cut rates.

The JOLTS showed that 7.05 million job openings were created in August, which undershot the 7.19 million forecast. Overall, the US jobs market is in rude health.         

Levi Strauss revealed positive third-quarter figures yesterday after the close las night. EPS were 31 cents, which topped the 28 cents forecast, while revenue was $1.45 billion, marginally head of the consensus estimate. The fashion house had problems at its US operation due to a delay in the takeover of South American distributor, but the group affirmed its headline annual guidance. Levi will continue to peruse direct-to-costumers sales as traditional high street retailers are finding trading tough. The stocks in down over 5%. 

Domino’s Pizza were downgraded by Argus to ‘hold’ from ‘buy’. The move comes one day after Domino’s posted quarterly figures that undershot analysts’ forecasts on EPS, revenue plus same store sales.               

FX

The US dollar index is fractionally lower as traders await the Fed minutes. Volatility across the currency markets has been low as it has been a quiet day in terms of economic news.

The EU’s chief negotiator Michel Barnier, said the proposals put forward by Boris Johnson are not acceptable. Mr Barnier also said that sealing a Brexit deal might be very difficult, but goodwill exists on both sides, so an agreement is possible. GBP/USD is fractionally higher today. 

Commodities

Gold is a little higher today as the softer US dollar has helped the commodity. The inverse relationship between gold and the greenback has been strong recently, and that is playing out today. While the metal holds about the $1,500 mark, the wider bullish trend should continue.   

Oil initially pushed lower after the Energy Information Administration report showed that US oil stockpiles increased by 2.92 million barrels, while traders were expecting a build of 1.41 million barrels. Gasoline inventories fell by 1.21 million barrels, which exceeded the 257,000 barrel draw that dealers were expecting .It is a little worrying that inventories are rising despite lower prices, as it suggests that demand is weak. 

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