Originally published by CMC Markets
The FTSE 100 is broadly unchanged while continental Europe is in the red.
Europe
It has been a lacklustre session today as traders are waiting for central bank updates later this week. The Bank of Japan, Federal Reserve and Bank of England will update the market, and it seems dealers are waiting on the sidelines until then.
GVC Holdings (LON:GVC) jumped today after the company announced a joint venture with MGM Resorts International (NYSE:MGM). GVC have been expanding via acquisitions in recent years and the latest move comes ahead of the American football season, which kicks off in September. In May, a US Supreme Court ruling paved the way for sports gambling to be legalised, and triggered a wave of interest in the US market from overseas companies. GVC’s share price hit an all-time high today, and if the bullish move continues it could target 1,200p.
Ibstock (LON:IBST) shares have fallen today after the firm issued a profit warning. The company has been at full capacity for a prolonged period, and today it announced plans to undergo a ’12 month period of increased maintenance’, and output will take a knock on the back of it. The brickmaker’s previous profit guidance was between £130 million and £134 million, and now it foresees profit to be between £121 million and £125 million. The group confirmed that demand for bricks is strong, and that it is in the long-term interest of the firm to carry out the maintenance work.
Heineke's (AS:HEIN) shares are in the red after the brewer confirmed that first-half operating profit slipped by 3%. Revenue rose by 4%, but falling margins at its Brazilian operation and adverse foreign exchange effects dented profit. The firm warned that trading will remain ‘volatile’ and this added to the weak investor confidence.
US
Equity markets are mixed as earnings season continues. Caterpillar (NYSE:CAT) shares are in demand after the company posted ‘record’ second-quarter figures, and the firm raised its full-year guidance. The bullish outlook comes even though the firm is predicting it will incur costs of between $100 and $200 million on account of the tariffs.
The Nasdaq 100 is firmly in the red as big name tech stocks have fallen out of favour with investors. Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) are all lower today, and there is a sense that the once darlings of the market are now past their prime. The exodus from tech stocks could see traditional stocks like Caterpillar receive renewed demand.
FX
EUR/USD has been lifted by the dip in the US dollar. The single currency made gains against the greenback despite a disappointing CPI update from Germany. The inflation rate slipped to 2% from 2.1%, while economists were predicting it to hold steady at 2.1%. The European Central Bank confirmed it won’t be hiking interest rates until at least after the summer of 2019, and today’s German CPI update suggests that demand in Germany is slipping.
GBP/USD is a touch higher this afternoon. UK mortgage lending in June was £3.85 billion, while economists were expecting £3.95 billion, and the May figure was revised from £3.86 billion to £3.77 billion. The rise in mortgage lending indicates robust demand, but high levels of household debt is concerning.
Commodities
Gold is largely unchanged despite the sizeable sell-off in the US dollar. The metal has had a strong inverse relationship with the US dollar in recent months, and the inability to push higher today is concerning. Gold had been in a downward trend since April and if the bearish move continues it could target $1,204.
WTI and Brent crude oil are higher today as traders are worried about future supply levels. The planned sanctions for Iran are fuelling fears about future supply. On Friday, the US revealed solid growth figures too and this pointed to higher demand, which is also adding to the upward pressure on the oil market.