Europe
Stocks are in positive territory today as the Jackson Hole symposium gets underway. Traders will be paying close attention to the updates from central bankers over the next few days, and the speech from the European Central Bank President, Mario Draghi will be of particular importance. Mr Draghi, may or may not discuss his plans to alter the ECB’s monetary policy, and either outcome may spur trading activity.
CRH (LON:CRH) is one of the biggest gainers on the FTSE100 today after the building materials company revealed a respectable set of interim results. The firm reported the sale of its US distribution business for $2.6 billion and it also stated it is buying a German lime and aggregates business for €600 million. CRH are continuing their policy of moving funds into businesses they feel represent good value. The Irish company derives the majority of its revenue in the US, and if President Trump can get his infrastructure plans approved, it could be a major benefactors from the scheme.
Shares in Dixons Carphone (LON:DC) were hit hard today after the company issued a profit warning. The company expects to post a profit of between £360 million and £440 million, and that compares with the previous forecast of £497 million. The firm changed the way it sells software, and that is the reason behind the profit warning. The outlook for the UK mobile phone market was described as ‘more challenging’, and that added to the bearish sentiment surrounding the stock. The share price has been losing ground since the end of 2015, and now after the major gap lower today underlines the negative outlook.
US
The major US indices: S&P 500, Dow Jones and Nasdaq 100, are broadly unchanged today as political uncertainty and the start of the central banker’s convention are at the forefront of traders’ minds. Today is the first day of the much waited Jackson Hole symposium, and updates from central bankers will be closely watched by investors.
Traders are still worried about the situation in Washington DC, as Donald Trump has warned the US government will shut down if politicians can’t find the funding for the Mexican wall project. While Mr Trump is talking tough about a government shutdown, traders will be fearful of going long. The US President is not afraid of using aggressive language, just look at the North Korean situation – which is still ongoing.
FX
The EUR/USD is marginally lower today as all eyes will be on Mario Draghi over the next few days. Two unknown sources at the ECB stated will not be talking about tapering the stimulus package, but traders will be listening out for any clues in relation to plans for monetary policy. Spain announced solid growth figures today, which shows the loose monetary policy in the region is working.
The GBP/USD is broadly unchanged on the day even though the latest UK GDP numbers were in line with estimates, and we saw some housing data from the US which came in below expectations. The pound has been struggling against the US dollar lately, and it seems traders can’t be convinced to buy the pound even though the economy is steady in relation to that of the US.
Commodities
Gold is marginally lower on the day as funds flow into global equities. The risk-on attitude from investors has hurt gold slightly. The metal has experienced low volatility recently and the range it has been trading is narrowing. The metal is trading at the top end of its range lately, and while traders don’t fear another rate hike from the Federal Reserve, the asset will be in demand.
Brent crude oil WTI are lower today as profit taking kicks in from the strong finish last night. Yesterday we saw US oil inventories fall for an eight consecutive week. The energy information agency report showed that oil stockpiles dropped by 3.3 million barrels, while traders were expecting a drop of 3.6 million barrels. The same report revealed an increase in US oil production, which is now at its highest level in just over two years.
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