Concerns over global trade have put pressure on European equities. Investors continue to be fearful about the global trade situation, and the sell-off in Asia overnight has weighed on sentiment in Europe. Uncertainty regarding German politics is playing into the decline, as Angela Merkel is at loggerheads with Horst Seehofer over immigration. Traders are nervous that this issue could bring down Mrs Merkel.
Vedanta Resources (LON:VED) shares have surged as the company is on the verge of being taken over by Anil Agarwal – the founder and majority shareholder of the company. Mr Agarwal’s family trust, Volcan, has offered 825p per share for the remaining 33.5% stake in the company. The aim is to simplify the business and there is a belief that the London listing is no longer necessary. Shares are up 26% to 820p
Micro Focus (LON:MCRO) shares are in demand after the company announced it will sell its SUSE software business for $2.5 million. The funds will be used to pay down debt and boost capital returns to shareholders. The trimming down of the business and the promise of higher capital returns has improved investor confidence, especially in light of the profit warning in March. The share price has been in recovery since March, and if the upward trend continues it could target 1,500p.
Tesco (LON:TSCO) and Carrefour (PA:CARR) have entered an agreement to use their combined buying power to obtain more competitive prices from suppliers. The arrangement will run for three years, and the move was triggered by intense price wars within the supermarket sector. It’s a race to the bottom for retailers, and the consumer has been the only real beneficiary. The agreement between Tesco and Carrefour should help both companies keep costs down.
EUR/USD is softer due to the rally in the US dollar, and the mixed eurozone data hasn’t helped either. The German manufacturing PMI report was unchanged on the month and in line with expectations, while the French report missed estimates.
GBP/USD is also suffering at the hands of the firmer US dollar. The UK latest manufacturing PMI report came in at 54.4, topping the consensus estimate of 54, but the announcement failed to boost the pound.
Tesla (NASDAQ:TSLA) shares will be in focus today after the company reached its target of producing 5,000 Model 3s per week before the end of the second quarter. The company produced a total of 7,000 cars in the final week of the second quarter, which highlights their ability to mass produce electric cars.
At 3pm (UK time) the US will announce the June manufacturing PMI report, and the consensus estimate is 58.1, compared to May’s 58.7.
We are expecting the Dow Jones to open down 146 points at 24,125 and we are calling the S&P 500 down 13 points at 2,705.
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