European markets withstand US tech flu

In the last day of trading before the US closes down for Thanksgiving holidays, risk aversion has eased and stocks are trading higher.

In the last day of trading before the US closes down for Thanksgiving holidays, risk aversion has eased and stocks are trading higher.

Despite a sharp selloff on Wall Street late Tuesday which continued amid Asian technology stocks this morning European markets are trading solidly higher. However, concerns over the US-China trade relations continue to linger and oil prices, though higher after the London market opened, remain relatively low.

Company results met with mixed market reactions

In London, a host of company results, mostly positive, was met with mixed reactions this morning. United Utilities, for instance, traditionally a staple stable stock, is being sold off despite reporting a 7% pretax profit and increasing its dividend. Sage Group and Kingfisher were also hit, the former for forecasting lower operating margins and the latter because its sales in the UK are declining. Precious metals firm Johnson Matthey was one of a few stocks to be bid up post results, having reported a nearly 20% increase in pretax profit and forecasting strong full year growth. The unforgiving mood in the market is a reflection of the underlying Brexit tensions which continue unabated as Theresa May heads for Brussels to finalise the current Brexit deal. EU officials have yet to ratify the text before them with access to the EU single market and Gibraltar remaining the stumbling blocks. At home, the stream of comments from various MPs continues to indicate that there is a good chance of the deal being rejected once it comes back for final parliamentarian approval.

No wonder then that the pound is heading in two directions, weakening against the euro but holding its ground against the dollar. In contrast, the greenback is under pressure this morning, weakening against a basket of currencies as the safe haven buying triggered by this week’s Wall Street tech stock sell off eased.

Oil up but from a low base

Brent crude and the WTI are trading 1.1% and 1.83% higher this morning, not so much because the fundamentals have started working in favour of black gold but because at current prices they are starting to look relatively cheap – given that they have lost more than 25% over the last three weeks. The market may need to consolidate around the current levels and work out the next signal because supply and demand data now can be interpreted either way.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.