Europe
The FTSE 100 is higher on the session in the wake of the UK Chancellor, Philip Hammond, lowering the growth forecast for the UK over the next few years. The lower revision to UK growth, saw the decline in the pound, which helped the FTSE 100 as it is very internally focused.
UK homebuilders such as Bellway (LON:BWY), Berkeley Group (LON:BKGH), and Barratt Developments (LON:BDEV) are in the red after the UK Autumn Budget revealed a plan to shake up the law in relation to land banks. Some house builders have been accused of sitting on land banks and slowly developing the sites, as a way of gradually increasing the supply of new homes. The new initiative introduced by Mr Hammond could see land reclaimed if it isn’t developed quickly enough. This may lead to a sudden increase of homebuilding activity, and it could also curtail future potential earnings.
The news that stamp duty for first time buyers will be scrapped on properties worth up to £300,000, may stimulate the housing market, but it appears the new land bank laws have over shadowed the announcement.
Thomas Cook Group (LON:TCG) shares are down 7.7% after the travel operator saw profit margins fall by 1.3% to 22.1%. Tough competition in the Spanish holiday market was cited for the reason behind the fall in margin. The travel industry is heading in the same direction as the British supermarket sector, they are cutting costs to entice customers, and it is the shareholders who are suffering.
US
US equity indices rack up fresh record highs as the positive sentiment has returned to the stock market ahead of the busy shopping season. Tomorrow the US will celebrate Thanksgiving, and retailers expected to be busy on Black Friday and Cyber Monday. Volatility in US equities is expected to be low today in advance of the public holiday.
The Federal Reserve will release the minutes from the meeting earlier this month. The update will provide the market with an insight as to what the Fed are thinking. Traders are very much expecting to see an interest rate hike next month, but if there are any clues as to what 2018 will bring ,that will be of major interest.
US Durable goods sold in October fell by 1.2%, and traders were expecting to see a rise of 0.3%, and that compared with September reading of 2.2%. The dip is still worrying since the US economy needs a healthy level of consumer confidence to keep growing.
FX
GBP/USD was volatile today as the UK Autumn budget was announced. The British Chancellor, Philip Hammond, lowered the UK’s forecasts for the next year, but sterling managed to shrug it off and went on to it hit a level not seen since 2nd November. The general dollar weakness has helped the pound today. The US dollar index is down 0.5%, while the pound is up only 0.25% against the greenback, so it is still relatively weak on the session.
EUR/USD is higher on the session, helped in part by the dip in the US dollar. The greenback is suffering from uncertainty surrounding the Federal Reserve, as the US central bank will have four seats to fill in 2018. Dealers don’t know what direction the Fed will take year, and that is why the US dollar is coming under a bit of pressure. The dragging on of US tax reforms is also hurting the US dollar.
Commodities
Gold is creeping higher as the weakness in the US dollar has been helping it gain ground again. Despite the dip in the greenback recently, the gold market can’t seem to develop a decent rally, only just a few dollars. The real test of this upward move will be if it can clear the November crack the $1300 mark. The dip in the sale of US durable goods could keep the dollar soft, and in turn prop up gold.
WTI and Brent Crude slipped after the latest US oil and gasoline figures were released, but now have bounced back and are firmly higher on the day. Oil stockpiles in the US fell by 1.85 million barrels, while the market was expecting to see a fall of 2. 2 million barrels. Gasoline inventories rose by 44,000 barrels, but traders are expecting to see a build of 1 million barrels.
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