Stock markets are set to finish firmly in the red as a number of factors are weighing on sentiment. 

Europe

Trade concerns have been hanging over stocks all week and so have worries about weakening emerging market (EM) economies, and now the spike in the US dollar on the back of the US non-farm payrolls report is compounding the EM issue.

IAG shares have fallen today after it was confirmed that British Airways were the victim of a hack. Personal and payment details of the airline’s customers were stolen, and clients were urged to check with their bank account or credit card. The firm’s reputation has taken a hit. Carphone Warehouse were the victim of a similar hack, and the company was fined £400,000 by the Information Commissioners Office, and IAG could suffer a similar fate.

Greene King shares are in demand after the company had a solid start to the financial year. In the first 18 weeks of the new financial year, the company posted a 2.8% rise in like-for-like sales. The warm weather and England’s success in the world cup helped the pub operator. The firm in making good progress on the reorganising of its credit lines, as borrowing costs are expected to be reduced, and the services should be more flexible.  Greene King are on track to close between 100 and 110 pubs this year, and open nine new establishments. The share price gapped higher today, and a retake of the 200-day moving average at 531p could boost investor confidence.

Ashmore revealed a stellar set of figures as assets under management (AuM) jumped by 26% on a year-on-year basis. It was a record for new inflows, and that included ‘strong retail’ demand. The asset manager specialises in investing in EMs, and the group confirmed that 73% of their 1-year investments are topping benchmarks, while 94% of 3-year investments are outperforming benchmarks. Given the recent declines in some EM economies the firm may find trading harder this year.

US

The latest non-farm payrolls report was strong. In August, 201,000 jobs were added, while economists were anticipating 198,000. The July report was revised lower to 147,000 from 157,000. The unemployment rate held steady at 3.9%. Average earnings on a yearly basis were 2.9%, up from 2.7% the month previous. The earning component was the highlight of the update, and it raised the prospect of further tightening from the Federal Reserve.

Stocks are a little on the mixed side as the jump in the greenback is likely to put additional pressure on EM economies which is hanging over global sentiment. On the other hand, the impressive jobs report points to a healthy US economy.

The wheels have come off Tesla as two high profile resignations and questionable behaviour from the CEO Elon Musk has prompted the stock to fall. Gaby Toledano, the head of HR will not be returning after a leave of absence, it was confirmed that Dave Morton – the head of accounting, stepped down too. The news adds to the sour sentiment that has surrounded the stock in recent weeks.

FX

EUR/USD is in the red after Germany posted disappointing economic indicators this morning, and the jump in the greenback due to the strong US jobs report put additional pressure on the currency pair. German industrial production slipped by 1.1% and the trade surplus dipped to €15.3 billion, this could be an indicator that the German economy is feeling the effects of the EU-US standoff regarding trade. Overall the US jobs report was solid, but the earnings component was very strong and that has increased the likelihood the Fed will hike rates this month and in December.

GBP/USD is higher today after a transcript of the meeting between EU and UK negotiators revealed that the EU’s Michel Barnier has taken a softer stance in relation to the Irish border. Sterling jumped on the back of this as it suggests as hard Brexit will be avoided, but there is still work to be done. The pound’s rally today is all the more impressive given the strength of the US dollar.

It was reported that Coindesk are keen to work with Blackrock in order to launch a cryptocurrency exchanged traded fund (ETF). Should the move go ahead, it would add credibility, security and funds to the digit currency markets. That being said Bitcoin and Ethereum are in the red after Goldman Sachs halted their plans to set up a cyrptocurrency trading desk earlier this week.

Commodities

Gold is in the red due to the firmer US dollar. Today’s jobs report has stoked fears the Federal Reserve will hike interest rates twice more in 2018. The is a strong inverse relationship between gold and the US dollar, and the metal could remain under pressure on the run up to the Fed meeting later this month.

WTI and Brent crude oil are lower today are traders remain mindful of the Energy Information Administration report which was released yesterday, and showed a large increase in gasoline stockpiles, and that is a symptom of a underwhelming driving season in the US. 

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