Continued trade tensions are weighing on European equity markets. The latest round of tariffs that were announced by the US and China are set to kick in today and this has soured the mood this morning. Beijing has made it clear that they are not willing to hold trade talks with the US, until the threat of further tariffs is removed. Given that we are unlikely to see a resolution to the situation anytime soon, stocks might remain under pressure.
Thomas Cook (LON:TCG) shares slumped this morning after the company issued a profit warning. The very warm weather experienced in northern Europe was blamed for the earnings warning. Booking rose by 12% in the summer, but prices were cut by 5% to entice buyers. The travel operator confirmed that profit would be at the lower end of expectations in July, and today’s update was a further blow to investor sentiment. The stock has been in a downward trend since May, and if the bearish move continues it could target the 53p region.
Randgold Resources (LON:RRS) and Barrick Gold (NYSE:ABX) are in merger talks, and should the deal go-ahead it would create the world’s largest gold miner. The underlying gold market is down over 8% year-to-date, and that is likely to be the main factor driving the potential tie-up. If the two miners join forces, it would create a company with a market capitalisation of $18 billion, and there would be great opportunities for synergies. The potential for cost savings are high, and two companies that are muddling along might create one reasonably profitable group.
SKY (LON:SKYB) has recommended that its shareholders accept Comcast’s offer of $40 billion for the company. Comcast’s bid was £17.28 per share, while Twenty-First Century Fox's (MX:FOX) was £15.67 and Sky said Comcast’s offer is an ‘excellent’ for shareholders. Comcast (NASDAQ:CMCSA) is the largest provider of broadband and cable operator in the US, while Sky has a large presence in Europe across per-TV, broadband and phone services, and the new group will be truly a global player.
EUR/USD is higher this morning on account of the continued weakness in the US dollar. The latest German Ifo business climate report was 103.7, while economists were expecting 103.2.
Oil has surged this morning after Saudi Arabia and Russia revealed they will not be increasing output. The move comes after President Trump called on major oil producers to boost supply in order to take pressure of the price. WTI hit its highest level since July, while Brent Crude is near a multi-year high.
We are expecting the Dow Jones to open down 58 points at 26,685 and we are calling the S&P 500 down 5 points at 2,924.
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