Europe
Equity markets are experiencing low volatility as traders are waiting for political events to unfold in the U.S. The shutdown in the U.S. is big political news but the impact on the financial markets has been relatively muted. The deadlock in Washington D.C. gives investors in Europe as excuse to play the wait-and-see card. European equities were experiencing low volatility last week, and this is the continuation.
The political mood in Germany is improving as the SPD has agreed to enter into formal negations with the CDU. These talks are no guarantee that a coalition government will be formed, but traders are viewing the news as positive. The DAX isn’t too far away from its all-time highs, and if the talks go well, we could see it test record levels.
The Greek and Spanish stock markets are enjoying positive moves today, after the Standard & Poor’s upgraded Greek sovereign debt on Friday, and Fitch raised their outlooks on Spanish debt.
Barclay’s shares are up 4.19% after a U.S. hedge fund invested more than $1 billion in the British bank. Tiger Global Management now owns approximately a 2.5% stake in the company.
The U.K. gaming industry has taken a beating as there is speculation the government will lower the maximum size on fixed-odds gambling from £100 to £2. New Culture Minister Matt Hancock described that unique type of gambling as a "social blight." The entire gaming sector has come under pressure, and shares in GVC Holdings, William Hill, Paddy Power Betfair and Ladbrokes (LON:LCL) are in the red today.
Ocado (LON:OCDO) revealed another international tie-up as the company struck a deal with the Canadian company Sobey’s. The agreement will be worth $24 billion per year in revenue to Ocado, as Sobey’s is the second-largest food retailer in Canada. This is the second overseas deal that Ocado has struck and the first was announced in November - with the French firm Groupe Casino. The share price of Ocado is up 28%, and hit its highest level since March 2014, and the positive moves continues it could hit 600p.
U.S.
The S&P 500 and the Nasdaq 100 both eked out fresh all-time highs despite the U.S. government shutdown. Traders had time to digest the news of the political deadlock over the weekend, and seeing as the reaction from the markets was muted in 2013 – the last time it happened, history is now repeating itself. U.S. investors only need to look at Germany, the country has been without a function government since September, and the economy is still ticking over.
Haliburton shares are up 4.6% today after the company posted fourth-quarter earnings per share (EPS) of 53 cents, beating the market estimate of 46 cents. Total revenue came in $5.9 billion, up 47% from the same period last year. The stock has been in a solid upward trend since August, and its hits highest level since March 2017, and if the upward trend continues it could target $59.
FX
GBP/USD is taking advantage of the weak U.S. dollar today as is eyeing the 1.4000 mark. There were no major economic announcements from the U.K. today, but this week traders are looking ahead to the unemployment and wages data on Wednesday, and the GDP report on Friday. Sterling has been climbing lately as the economic indicators from the U.K. have been broadly positive, and the weakness in the greenback has accelerated the move. Sterling has been rising against the U.S. dollar for nine months and there are no signs of the trend changing.
EUR/USD has given up some ground today as traders take some profits from the positive run it has enjoyed lately. The currency pair has undergone low volatility today as a lack of economic indicators from the eurozone prompted dealers to unwind their long euro positions. The single currency has been pushing higher since November and traders will be paying attention to the European Central Bank (ECB) meeting on Thursday. The ECB is unlikely to change their policy, but the comments from Mario Draghi, the president, could give dealers an insight as to the long-term outlook of the bank.
Commodities
Gold is a touch higher today as the soft U.S. dollar is helping the market. Like most markets today, gold hasn’t moved much, but it’s remain in the upward trend that begun approximately five weeks ago. The uncertainty surrounding the government shutdown could keep the greenback in limbo, and, in turn, it may keep gold elevated. While it holds above 1300, its out is likely to remain positive.
WTI and Brent crude oil are slightly lower today as traders lacking enthusiasm. The energy market has cooled a little since it’s reached its highest level in over three years last week. We have seen some profit taking on oil but since the number of active rigs in the U.S. has declined by 5 to 747 last week, traders are techy about going short.