Fed comment causes slide

It’s not the rate decision, it is the comments. European stocks are on the decline taking their cue from US markets after the Federal Reserve’s comments about its policy stance no longer being "accommodative". However, the Fed’s chairman Jerome Powell explained that this wasn't meant as a signal.

Italy and European banks

In Europe Italy has the potential to disrupt markets the most as disagreements between the country’s coalition partners caused it to postpone a key decision on next year’s budget. The parties are backing a decision which would see Italy’s budget deficit grow above the target that the EU wants it at and this is sending shivers through markets that an unrestrained increase in Italian spending could start creating a situation similar to the one in Greece a few years ago. Italian banking stocks are not taking the delay well and with the European banking system being as interlinked as it is, concerns are growing about other major regional banks getting sucked into a bubbling crisis.

Although trade war news made fewer headlines in the last week, allowing the markets some breathing space, they are still rumbling on in the background, and not only between the US and China. President Trump said overnight he remains unhappy with the state of negotiations with Canada and refuses to meet his Canadian counterpart. That in itself is not huge news but as Europe waits for a better resolution of its trade problems with the US, not to mention China, the news from Washington indicates that that resolution may still be a way off.

TUI’s guidance fails to lift battered travel sector

Germany’s TUI provided some upbeat mood among the battered travel and airline sector confirming its previous earnings guidance for fiscal 2018 but warning that the decline in the Turkish lira will cause it to take a foreign exchange hit. The travel sector and airline stocks have been under pressure throughout this year despite in some cases rising passenger numbers. Currency issues and increasing costs including higher oil prices are the main culprits behind declines. Stocks in cruise provider Carnival and airlines were on the slide this morning despite the fact that TUI’s guidance indicates that the demand for the sectors is still going strong, despite these obstacles.