Europe
The major indices of Europe are mixed today as the trade spat has come to a standstill. The US-China trade situation remains in centre stage, and there doesn’t appear to be a clear way out of the deadlock. In the past 24 hours we have heard that Beijing are pessimistic about reaching a deal with the US.
The Trump administration has granted permission to US companies to continue dealing with Huawei for another 90 days, which is a token gesture but it shows goodwill nonetheless. Traders have failed to get excited today as the trade spat seems to have reached a standstill.
EasyJet (LON:EZJ) will try and snap up some of package holiday business in the wake of the collages of Thomas Cook. The demise of the travel group has left a gap in the market, so easyJet have decided to enter the fold. It is likely to be a short-to-medium term success as Thomas Cook were a big player in that sector, but given the overall changes in the industry, the airline might have limited success in the long-run as package holidays have been tapering-off in popularity for years. EasyJet registered a 26% decline in full-year pre-tax profit to £427 million, which was at the top end of forecasts, so traders reacted positively to the announcement.
The group blamed intense competition as well as a more subdued consumer environment for the fall in earnings, but forward bookings are ‘reassuring’.
Halma (LON:HLMA) revealed respectable first-half figures, which sent the share price to an all-time high. In the six month period, revenue and statutory pre-tax profit both increased by 12%. The interim dividend was nudged up by 7%. Halma confirmed that all major regions of the business saw an increase in revenue, and the firm expects to make further progress in the second-half.
Polypipe (LON:PLP) shares initially opened in excess of 5% as the company cautioned that profit would be slightly below the guidance. It now seems to have been a knee-jerk reaction as the remainder of the report had pockets of positivity. In the 10 month period, operating margins improved by 30 basis points and revenue rose by 4.3%. The share price is now down only 1.3%.
US
The lack of progress in the trade dispute has encouraged traders to trim their exposure to equity markets. The major US equity benchmarks have all registered record-highs recently, so now that we are in a lull, dealers are banking some of their profits.
The housing data was largely positive. Building permits for October were 1.46 million, which was an improvement on September’s 1.39 million, and economists were expecting 1.38 million. The housing starts reading was 1.31 million, but the consensus estimate was 1.32 million. The permits report suggests that appetite is ticking up.
Kohl's (NYSE:KSS) (NYSE:KSS) revealed disappointing third-quarter numbers. EPS and revenue were 74 cents and $4.36 billion, while the consensus was 86 cents and $4.40 billion respectively. Same-store-sales edged up by 0.4%, but traders were expecting 0.8% growth. The retailer has undergone restructuring recently, whereby it has invested in stores as well as ramping up its online presence, but so far the investment doesn’t seem to be paying off. There is a feeling the company has been too slow to adapt, hence why the results were underwhelming.
Home Depot (NYSE:HD) shares are in the red as traders focused in on the total same-stores sales metric, which came in at 3.6%, but the market was expecting 4.7%. In the previous quarterly update, the company lowered its same-store-sales, and today is undershot the level.
Yesterday the stock hit an all-time high, so we are now seeing some profit taking. Revenue for the quarter increased by 3.5% to $27.22 billion, narrowly missing forecasts. The group cut is full-year sales forecast to 1.8% growth from 2.3%, and that hit sentiment too.
FX
It has been an uneventful day in the currency markets. An absence of major economic or political news has left traders with little to go on, and that is why the trading ranges have been small. GBP/USD continues to hold up well as the pro-business Conservative Party are outperforming in the polls.
USD/CAD is higher today following three days of losses. The weakness in the oil market is hurting the Canadian dollar as the economy has a disproportionally large amount of exposure to the energy market. The currency pair has been broadly been moving higher since late October so it might seek to retest the 200-day moving average at 1.3276 in the near-term.
Commodities
Gold is marginally lower on account of the positive moves seen in global equities. Traders are in risk-on mode today, which is why the metal is lower. It is also worth noting that gold has gained ground over the past few sessions, and now we are seeing a pullback. The commodity has been broadly pushing lower since September, and while it remains below the $1,500 mark, the bearish move is likely to continue.
Oil is lower again as traders are worried about demand levels. Yesterday it was reported that Beijing are not hopeful about the prospect of a trade deal being reached. The negative sentiment continues to hang over the energy market as China is the largest importer of oil in the world. The global manufacturing industry is suffering, which is a factor is oil’s underperformance too.
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