US markets saw their second weekly fall in succession last week, over a combination of concerns about a Presidential impeachment, and reports that the White House was considering delisting Chinese stocks on US exchanges. This would seem a rather strange move given that Chinese officials are due to visit Washington next week to restart trade talks, however there has been very little predictability when it comes to the US, China playbook.
Markets in Europe were slightly more resilient, posting a small weekly loss, after four weeks of decent gains, while the FTSE100 outperformed, trading near to two month highs. What was surprising about the relative resilience of equity markets in Europe was the complete absence of positive drivers for European investors. The economic data was disappointing and there were numerous profit warnings from companies across Europe.
This morning’s Asia session was similarly mixed with investors taking comfort from a better than expected set of Chinese PMI numbers for September. In particular the Caixin manufacturing PMI rebounded strongly to 51.4 helping limit some of the negativity about how the Chinese economy might be doing and whether it is starting to show signs of bottoming out. Today’s trading activity may well also be being tempered by the fact that Chinese markets are on the cusp of their seven day Golden Week holiday
As we come to the end of Q3 markets here in Europe it’s been a decent month and another decent quarter, in fact European markets look set to be on course to post three positive quarters in a row this year, with the CAC40 looking set to be the best performer on that front.
In company news there was some reports circulating over the weekend that Bob Dudley might be stepping down as CEO from oil giant BP (LON:BP) in 12 months’ time. Taking over from Tony Hayward in the aftermath of the Deepwater Horizon disaster Dudley has been instrumental in steering BP through some very tortured waters, selling assets and restructuring the company in order to meet its commitments for cleaning up and compensating victims of the disaster as well as securing the company’s future in an era when the shift to renewables is gathering pace.
His legacy will be a smaller more nimble company, which even now still faces enormous challenges in not only cutting its future carbon foot print, but will need to adapt to a changing energy mix and which to all intents and purposes still has uncomfortably high debt levels, after the recent acquisition of BHP Billiton’s shale assets.
Amongst early gainers we’ve seen GlaxoSmithKline (LON:GSK) is higher after announcing positive results from a phase 3 Prima trial of Zejula which delivered a 38% reduction in the risk of disease progression or death in certain forms of ovarian cancer.
Also in the pharmaceutical sector AstraZeneca (LON:AZN) announced two trial updates, firstly with Tagrisso, its first line treatment for non-small lung cancer is the first of its kind to deliver a media overall survival of more than three years. Lynparza, a drug that treats ovarian cancer improved progression free survival in a late stage today from 22 months to 37 months in 41% of the test cases.
Metro Bank (LON:MTRO) shares are on the up again this morning after some heavy declines last week, after the bank pulled its bond issue. Weekend press reports that Elliott Advisors may be looking taking a stake in the troubled bank has seen the shares rebound strongly, though they still remain over 85% down year to date.
US markets look set to open higher later this today after Fridays decline saw the S&P500 close near its lowest levels since early September.
In further signs that the retail sector is struggling US teen fashion chain Forever 21 closed its doors over the weekend, filing for Chapter 11, putting at risk over hundreds of stores worldwide, as well as its stores here in the UK. Once again it would appear that too many stores and more nimble on-line competitors of the likes of Boohoo.com and ASOS (LON:ASOS) have done for the traditional bricks and mortar store.
Peloton (NASDAQ:PTON) saw yet another decline in its share price on Friday as early investors worried that, having had another chance to look at the financials of the business and appear to have concluded, not unreasonably that the valuation is a little on the optimistic side.
The US dollar appears to be showing little signs of weakness despite comments from Chicago Fed President Charles Evans that he was open minded about further cuts to the Fed Funds rate, saying that what’s been currently enacted may well be sufficient but that if the data changes he could well see the need for more cuts.
Dow Jones is expected to open 105 points higher at 26,925
S&P500 is expected to open 14 points higher at 2,975
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