Stocks calm down, dollar falls, gold shines – CMC Markets


Tthe influence in Europe was lackluster and the main indices should end in the red.

Europe

This morning, there was some excitement when Shinzo Abe, Prime Minister of Japan, announced his resignation for health reasons. The surprise announcement made a lot of headlines, but it didn’t have a huge impact on stocks in Europe. Things have been a bit directionless today, in part because there has been a lack of local news, but UK-based traders are likely to pull out before the long weekend.

Bayer Shares fell to their lowest level since April after the company warned it had hit some “bumps” in relation to closing the $ 11 billion settlement that is the result of the Roundup weedkiller scandal. The product in question is said to have caused cancer and the German company is hoping to end the scandal, but although there are fears that the final payment may exceed $ 11 billion, the share price will likely remain under pressure.

Supplier of plastics and fibers, Essentra, pursues policies that are more respectful of the environment. By 2040, the company aims to be carbon neutral and by 2025, it aims to source 20% of its raw materials and packaging from sustainable sources. The company confirmed that first half revenue and adjusted operating income fell 11.7% and 26.4% respectively. Margins went from 22.5% to 18.4%. The share price is a bit lower.

Waitrose signed an agreement with Deliveroo through which it will offer a rapid delivery service for 500 of its products from five of its stores. It will start with a 12 week trial. The decision comes as Ocado tie with Marks and Spencer will come into effect next week. The pandemic has highlighted the importance of having a robust delivery service, so Waitrose clearly wants to push back on M&S.

Polymetal stocks are in demand due to the strength in gold prices.

WE

the Dow Jones and the S&P 500 are slightly higher. The mood is a little optimistic thanks to the solid economic indicators. Personal spending in July was 1.9%, exceeding the 1.5% forecast. While personal income was 0.4%, and the consensus estimate was -0.2%. The Fed’s preferred measure of inflation is the core PCE, and it fell from 1.1% in June to 1.3% in July. The news comes a day after Fed chief Jerome Powell said the bank would allow inflation to rise above 2%. The University of Michigan’s final consumer sentiment reading was 74.1, up from 72.8 published in the preliminary update.

Difference stocks are a bit weaker even though the company’s second quarter results were initially well received. The quarterly loss per share was 17 cents, but it was less than the 41 cents per share loss expected by stock analysts. Sales in the three-month period fell 18% to $ 3.28 billion, beating expectations. The fashion house announced that its e-commerce business has nearly doubled. Gap was already undergoing restructuring, so it appears the pandemic has sped up the process as it will close more than 225 Gap and Banana Republic stores around the world.

TikTok, the Chinese-owned video-sharing app faces a ban in the United States, unless the group can divest its business in the United States. It has been speculated that the US subsidiary could be worth up to $ 30 billion. A series of American companies were cited as potential bidders, such as Goolge, Twitter and Oracle. Walmart says he’s ready to partner with Microsoft to buy the social media group. At first glance, Walmart’s decision seems odd, but TikTok could help it with its market activities and advertising.

FX

the US dollar index is deep in the red as the wider rally in the yen hurt the greenback. The surprise announcement earlier today of Shinzo Abe’s resignation as the Japanese prime minister raised the yen because it is associated with extremely loose fiscal and monetary policy. The dollar has managed to recover the ground it lost earlier thanks to solid consumption and basic PCE numbers – they indicate higher demand.

GBP / USD reached a level last seen in mid-December 2019 earlier today due to the weaker dollar. For much of August, the currency pair was limited, but setting multi-month highs could pave the way for further gains. The lack of progress on UK-EU talks has served as an anchor for the pound – some traders are sitting on the fence until the political picture becomes clearer. Andrew Bailey, the head of the Bank of England, was speaking earlier at the Jackson Hole Symposium, and he said the bank always has more monetary firepower. The extra stimulus could be called in when the leave program ends at the end of October.

EUR / USD was also raised by the weaker US dollar. The final reading of French GDP for the second quarter was -13.8%, unchanged from the preliminary announcement. The French CPI rate fell to 0.2% in August from 0.9% posted in July. The drop in the CPI indicates a drop in demand, which does not bode well for the second largest economy in the euro area.

USD / CAD is in the red but is off session lows due to the greenback’s slight rally. In June, the Canadian economy grew 6.5% on a monthly basis, exceeding the consensus estimate of 5.6%.

Basic products

Gold is up nearly 2% due to the weaker US dollar. In recent months, there has been a strong inverse relationship between the dollar and the metal. Three weeks ago, the commodity hit an all-time high, and that was largely due to the greenback’s bearish movement. As gold holds above the $ 1,900 mark, the broader uptrend should continue.

WTI and Brent raw oil is in the red because the adverse weather conditions that hit Texas and Louisiana did not cause major disruption to oil refineries. Earlier in the week, the oil market traded higher as workers were pulled from rigs in the Gulf of Mexico. More recently, there were concerns that refineries in affected states could face flooding – which they did not. Oil’s broader uptrend remains intact despite the negative movement of the past two sessions.


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