UK and Europe
Strong trading amongst European banks helped edge stock markets in Europe to new 2016 highs, whilst data showing a rise in unemployment and a downgrade to Paddy Power Betfair caused UK stocks to underperform. Gains were limited by a drop in the oil price which was adjusting to higher supply from Kuwait where oil workers ended their three-day strike.
The basic materials sector outshined the rest of the FTSE 100 as Anglo American (LON:AAL) shares come close to quadrupling from the lows in January.
ARM Holdings (LON:ARM) shares gave up initial gains of over 4% as focus shifted from well-received earnings to general uncertainty surrounding growth of the smartphone market.
Automakers in Europe were mixed in response to shares of Mitsubishi Motors (T:7211) being driven down 15% after admitting to falsifying fuel economy data. The risk that other car manufacturers have been test cheaters is arguably baked in to the share prices following the declines last autumn in the wake of the VW scandal.
The scale of the cheating at Mitsubishi does not appear to be as far reaching and as sophisticated as that perpetrated in Volkswagen (DE:VOWG_p) so the impact on the share price should be less in the coming weeks. Tyre pressure figures were faked to cajole mileage rates higher, a far cry from programming software to deliberately cheat the tests. Almost 470,000 vehicles made for Nissan (T:7201) are affected but this number could rise in the coming days following an investigation.
US
A mixed picture of corporate updates left US markets flat and down slightly from 2016 highs.
Yahoo (NASDAQ:YHOO) shares gained after a beat of first quarter estimates raised expectations for the size of bids in the auction for its internet business. CEO Melissa Mayer allayed some fears that the deal process has been disorderly and deliberately ignored by management saying “We have been responsive and engaging” with prospective bidders.
Shares of Intel (NASDAQ:INTC) overcame opening losses in early trading after the chip-maker announced it is cutting 12k jobs (11% of its workforce) and its CFO is stepping down as part of its restructuring.
FX
The US dollar was mostly stronger on Wednesday, though gains only ate someway into yesterday’s losses as data showed existing home sales grew faster than expected in March.
The British pound shrugged off data showing UK unemployment rose for the first time in almost a year and average earnings declined in the three months through March. Cable dropped immediately following the data release but dip-buyers swept in on a new wave of confidence that Britain will remain in the EU. Sterling’s recent gains are mostly churn after a big drop but warnings from the UK Treasury and BOE Governor Mark Carney at the margins have improved the chance of the UK remaining in EU
Commodities
An early decline the price of crude dissipated after US inventories saw a slightly smaller build of 2.1M than the 2.2M expected and dropped back from the 6.6M build last week. Gold prices steadied above $1250 per oz despite dollar strength.
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