Europe
There have been many twists and turns in the Brexit story, but the latest developments suggest that negotiations are heading in the right direction. The EU’s Donald Tusk, said the ‘basic foundations’ of a Brexit deal are ready, which has lifted the mood, but some traders remain cautious because things in politics are moving so quickly. The Brexit game of cat and mouse is still going on, hence why European equity markets are mixed this afternoon.
ASOS PLC (LON:ASOS) shares surged to a four month high after the company revealed a decline in earnings that was in line with forecasts. The online fashion house posted a 68% fall in annual profit to £33.1 million. In the summer the group said that profit will be between £30 million and £35 million. The group suffered major operational issues at warehouses in Germany in addition to the US, but the company ramped up capital expenditure for its logistics, so confidence has been restored somewhat. The firm has more work to do in that area, but it seems to have turned a corner, hence why the stock has rallied today.
Segro Plc (LON:SGRO) confirmed that on a nine month basis the rent roll growth from existing space, net of take-backs, was £10.6 million, which compared with last year’s figure of £6.9 million. Floor space for new developments jumped by 52% on an annual basis, and space should generate rent of approximately of £33 million. The group’s outlook is upbeat too as it started the ‘final part of the year with confidence’.
Barratt Developments PLC (LON:BDEV) announced that growth volumes will be at the lower end of the medium-term target, which has put a small bit of pressure on the stock today. Keep in mind the share price hit an 11 month high yesterday so things are too bad considering the not so optimistic outlook. The home builder has a robust balance sheet, so it should be in a good position to deal with the UK’s exit from the EU.
US
The mood on Wall Street is muted as President Trump said that China have started purchasing agricultural goods, but a trade deal won’t be signed until he meets China’s Xi Jinping in November. A lot can happen between now and then, so traders aren’t getting overly excited.
US retail sales dropped by 0.3% last month, while the report that strips out auto sales fell by 0.1%. The updates paint a picture of a more cautious consumer, which is playing on traders’ minds.
Dealers will be keeping an eye on Netflix Inc (NASDAQ:NFLX) as the company will reveal its third-quarter figures after the market close. The stock has been edging higher since late September, but it is still down over 20% since the second-quarter numbers in July. In the last quarterly update, the new subscriber figures were poor, which triggered the sell-off. In the US, new subscribers declined by over 120,000, while the consensus estimate was for an increase of more than 350,000. To make matters worse, the number of international subscribers jumped by 2.83 million – which was well below the expectation of 4.81 million. New seasons of Stranger Things as well as The Crown should draw in new viewers, but will it be enough to turn the sentiment around.
Bank of America (NYSE:BAC) shares are a little higher today after the group announced a positive set of third-quarterly results. EPS came in at 56 cents, which topped the 51 cents forecast, while revenue was marginally above expectations too. The investment banking division was the standout performer as fees jumped by 27%. Wall Street banks have been making a concerted effort to derive more money from advisory work, and Bank of American are leading the way.
FX
GBP/USD witnessed major volatility on the back of the twists and turns in the Brexit talks. The pound hit a fresh five month high versus the greenback as traders are cautiously optimistic about UK-EU situation. Even if the politics progresses, volatility is likely to remain high. The 1.3000 mark could be targeted should the bullish run continue.
Weakness in the US dollar has lifted EUR/USD. The greenback took a hit due to the US retail sales figures. Earlier today, the eurozone CPI reading slipped to 0.8% in September, so it is clear that demand in the currency bloc is sliding.
Commodities
Gold is experiencing low volatility today, just like the major equity indices. The absence of any clear direction in equities has brought about a muted mood in the gold market. The yellow metal hit a six year high in early September, but since then we have seen a number lower lows and lower highs, so the metal might target the $1,455 area.
WTI and Brent crude are higher today as there were hints that OPEC could impose deeper production cuts in a bid to prop up the market. Oil has endured a sizeable decline in the wake of the Saudi oil facility attack, so the major oil producers are keen to stem the downward pressure on the energy.
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