Originally published by CMC Markets
Markets are booming today as traders hold on to some hope that China and the US will strike a deal in relation to trade.
Europe
There has been much detail around it, but it was confirmed that delegates from both sides are still in discussions. Perhaps, it’s a sign that traders are desperate to cling on to any belief that an agreement can be reached. Mining companies like BHP Billiton (LON:BHPB), Rio Tinto (LON:RIO), and Glencore (LON:GLEN) are all helping the FTSE 100 today.
WPP (LON:WPP) shares are in demand after the company announced a restructuring plan. The firm plans to reduce its headcount of 134,000, by 3,500, and the firm plans either merge or close almost 200 offices. The move comes on the back of the departure of the founder and CEO, Sir Martin Sorrel, earlier this year. The company has struggled to keep up with the new trends in advertising, and has been losing out to the likes of Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB). The group hopes to save £275 million a year by 2021 from restructuring.
Ashtead (LON:AHT) announced an impressive set of first-half figures. Revenue jumped by 19% and pre-tax profit rose by 25%. The company earns the vast majority of its income in the US, and that operation comfortably topped forecasts. The group rents out equipment, and it announced plans to capture more of the house building sector, and that worried trades a little given the US construction sector is showing signs of softening. The stock has been in a downward trend since September, and if the move continues it might retest 1,600p.
Superdry (LON:SDRY) shares are in the red after Berenberg downgraded the stock to hold from buy, and the bank also trimmed the price target to 950p, from 1,200p. The fashion house was already have a tough year, along with other companies in the same industry, and then it reported a profit warning in October. The retailer will reveal its first-half figures tomorrow, and it seems that Berenberg are getting in their opinion in first.
US
Stocks have rallied on the hopes that the US and China will strike a trade deal. President Trump tweeted that there are ‘very productive conversations’ going on with China, and that has lifted sentiment. No further details have been announced, so traders will be paying close attention to his twitter feed.
It was reported that China are considering lowering the tariff on US cars from 40% to 15%. Should this get approved, it would be a major boost to the automakers, but it would also be a positive step for US-China relations.
FX
EUR/USD is in the red as the disappointing German ZEW economic sentiment report weighed on the euro. The report came in at -17.5, and economists were expecting -25. Admittedly, it topped expectations, but the reading has been negative since March, and that highlights the prolonged period of weak sentiment.
GBP/USD has managed to claw back some of the ground it lost yesterday. Some traders are sceptical about what Theresa May can wrangle out of Brussels this far gone in the game. The UK unemployment rate held steady at 4.1% and average wages excluding bonuses jumped by 3.3%.
Commodities
Gold has barely moved on the day. Volatility has been low in recent months and today is no different. The metal has been staging a comeback since mid-August and if the bullish move continues it could target the $1,265 region.
Oil has been lifted by the feel good factor surrounding the US and China. Even though it was reported that talks are taking place that is enough of a sign to keep the bulls happy. The relatively cheap oil price makes it attractive too.