European equity benchmarks are mixed as dealers await Italian policy makers to resubmit their budget to the EU. 

Europe

Traders are half-expecting a political fight between the two sides as neither are showing any signs of backing down. The Italian market has swung into positive territory as short covering has set in, but the situation has the potential to trigger another round of the eurozone debt crisis. The FTSE 100 is being dragged lower by the major oil stocks like BP and Royal Dutch Shell.

Vodafone shares rallied today after the group narrowed its full-year profit guidance. The company expects to see a 3% increase in earnings, while their old forecast was between 1% and 5%. Despite calls to trim the dividend, the cash pay-out was kept unchanged. The telecoms giant registered impairments of $6.9 billion in relation to the write downs in Romania, India, and Spain. Last week, the stock hit its lowest level since 2010, so investor confidence is clearly weak. If the bearish move continues it might target 125p.

Taylor Wimpey confirmed that they expect no growth in terms of sales next year. The house builder is citing uncertainty surrounding Brexit as the reason for the less that optimistic outlook. The company also said that there is potential for ‘significant growth’ after 2020. The firm also warned that costs will increase by 3-4%. The number of completions so far this year has increased by 12%, and the firm anticipates to meet forecasts. The stock has been falling since January, and if the bearish move continues it could target 150p.

Experian shares have risen after the group released respectable figures. Revenue rose by 7%, while earnings dropped by 5% .A negative foreign exchange move in Brazil was blamed for the fall in profit. A number of high profile security breaches, and tighter regulation surrounding data has driven demand for the company’s services. The company now expects full-year revenue to be at the upper end of forecasts. The share price has been in an upward trend for over four years, and if the bullish move continues it could target 2,000p. 

Land Securities have an ambitious investment plan in the pipeline, but they are waiting for the UK to exit the EU first. The company is planning £3 billion worth of developments, but the group wants to wait and see the fallout of Brexit. First-half pre-tax profit increased by 23.5%, and that was driven by lower borrowing costs and higher rental income. The stock has been in decline for 18 months, and if the bearish move continues it could target 800p.

US

The Dow Jones is lower following the big sell-off suffered yesterday as the market couldn’t hold onto the early gains it made. The S&P 500 and NASDAQ are showing small gains, but sentiment is clearly fragile. It was reported that Steven Mnuchin, Treasury Secretary, had talks with China’s vice premier. The US and China will discuss trade at the G20 summit later this month. Trade uncertainty is hanging over the market.  

Home Depot shares are lower despite the impressive figures from the company. Third-quarter sales and average transactions increased. Like-for-like sales climbed by 5.5%, topping the forecast of 5.2%. The outlook is optimistic too as the group upped the earnings per share forecast by 3.5%.

FX

The US dollar index has retreated from its 17-month high and traders locked in their profits. The greenback has been on a great run recently as the Federal Reserve are going to continue down the path of monetary tightening, so a bit of a pullback is no surprise.

EUR/USD is higher on account of the broad sell-off in the greenback. Today the Italian government are due to resubmit their budget to the EU, and it looks like the two sides are going to clash. The anti-establishment parties in Italy are not keen to bow to the EU’s demands. The economy minister, Giovanni Tria, claimed the growth forecast is ‘non-negotiable’. Should a political fight kick-off, it is likely to put pressure on the euro.

GBP/USD has also been pushed higher by the weaker US dollar. The impressive earnings figures from the UK also lifted the pound. UK average earnings excluding bonuses grew by 3.2% in September – its highest reading since the credit crisis. There is a lot of news surrounding Brexit, but not much actual information. No deal is expected today, but there might be an agreement tomorrow

Commodities

Gold is largely unchanged today despite the aggressive sell-off in the US dollar. Lately, gold has caught a bid when the greenback has been soft, and the fact that it could muster much of a rally today underlines the sour sentiment. Gold is hovering round the $1,200 mark, and a break below it might bring $1,180 into play.

Oil has tumbled again after President Trump tweeted that he hopes that OPEC won’t cut supply. The US President also claimed that oil prices should be lower given supply levels. Seeing as Mr Trump took to Twitter yesterday, it appears that he got his wishes. Brent has fallen to its lowest level since April, and WTI has dropped to a level last seen in December 2017.

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