Europe
When it comes to the tomorrow’s all-important Brexit deal vote, traders are curtailing their positons as the vote is tipped to go down to the wire. The bullish mood that we saw during the week on the build up to the deal being brokered and announced, has now been replaced with a more cautious outlook. Mr Johnson will have a tough task getting the deal approved as he doesn’t have a majority in the House of Commons, but sentiment seems to be more positive now than when Mrs May was seeking approval for her deal.
Mario Draghi, the head of the ECB, said there are some ‘mild signs of overvaluations in the euro area’, which prompted another leg lower in equity markets. The central banker oversaw an enormous amount of quantitative easing, so it’s hardly surprising there are lofty valuations in the region. It seems strange that he would make such a comment, but then again he will be stepping down as the central bank’s chief later this month.
London Stock Exchange Group (LON:LSE) shares are in demand on the back of solid quarterly figures. On a constant currency basis, third-quarter income increase by 10%, which was assisted by a 22% jump in revenue in clearing activity. The firm also confirmed that is has started the process to achieve regulatory support for the Refinitiv deal. Like with many businesses, uncertainty in relation to Brexit is hanging over the firm, but the LSE expects that EU customers will have access to London euro clearing beyond March 2020. A mixture of the respectable revenue levels, combined with the perceived progress in the Refinitiv move has boosted sentiment in the stock.
InterContinental Hotels Group (LON:IHG) shares fell to a six month low as third-quarter comparable revenue per room slipped by 0.8%. The hotel group cited tougher trading conditions in China, the US plus unrest in Hong Kong for the subpar performance. Globally, consumer sentiment is becoming more fragile, and when consumers are seeking to cut back non–essential expenditure, holidays tend to be postponed, so the outlook for the firm isn’t too rosy.
Renault's (LON:0NQF) update sent a ripple through the European car sector. The firm now predicts that annual sales are likely to be 3-4% lower, in additional to that, the firm expects operating margins to 5%, while the previous guidance was 6%. Tighter regulation plus a subdued ‘economic environment’ were blamed for the reduction in guidance. The bulk of Renault’s concerns are likely to impact the sector as a whole, hence why Fiat Chrysler, Volkswagen (DE:VOWG_p) and Daimler are all in the red too.
US
The major equity markets are showing small losses amid an absence of macroeconomic news. Things have gone a little quiet on the US-China trade front, plus, there were no important economic announcements today, so traders had little to go on. The drab sentiment in Europe has left US traders uninspired.
Coca-Cola had a solid third-quarter as EPS jumped by 44%. Net sales for the period increased by 8% to $9.5 billion, which marginally topped the $9.4 billion forecast. On an adjusted basis, EPS were 56 cents – in line with forecasts. Consumers are becoming more health conscious, something Coca-Cola (NYSE:KO) are adapting to, as Coke Zero saw strong sales. The stock is roughly 4% away from its intraday record-high, which sums up how traders feel about the company.
On an annual basis, Schlumberger (NYSE:SLB), said that third-quarter EPS slipped by 6.5% to 43 cents, which topped the 40 cents forecast. The group posted a 3% rise in worldwide as well as international revenue, while the US revenue edged up by 2%. The group took a $12.7 billion impairment charge, which was mostly a goodwill impairment charge. The colossal charge was in the pipeline as the stock fell to a 15 year low recently. The share price is slightly higher today.
FX
GBP/USD is flat as traders are trimming their sterling long positions ahead of all-important Brexit deal vote. The pound saw major volatility this week on account of the Brexit goings on, but today the mood has been much more muted. Many dealers are playing the wait-and-see game as all eyes will be on Westminster tomorrow.
The broad decline in the US dollar index has lifted AUD/USD. The Aussie dollar has been pushing higher for over two weeks, and the fact the currency gained ground despite the disappointing Chinese growth numbers underlines the bullish move.
Commodities
Gold is showing a small loss even though the greenback is largely lower, plus equity markets are broadly showing small losses. The yellow metal has a tendency to gain ground when the US dollar index is lower, but that isn’t the case today. The metal has been pushing lower since early September, and while it remains below the $1,500 mark, the outlook is likely to remain negative.
Oil is being elevated by the Chinese refinery throughput report, which increased by over 9% in September, on an annual basis. There was also an update which showed that OPEC plus it partners are exceeding their compliance levels when it comes to output. The worldwide manufacturing sector is weak, so it is no surprise that major producers are doing all they can to keep prices up.
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