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European markets cautious despite new Wall Street record - as it happened European markets cautious despite new Wall Street record - as it happened
(4 months later)
Here is our story on the record breaking bull market run in the US:Here is our story on the record breaking bull market run in the US:
Wall Street poised to set record for longest rally in history
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.
With dollar weakness continuing, even the pound is benefiting. Sterling is now up 0.2% at $1.2925 after its earlier dip.With dollar weakness continuing, even the pound is benefiting. Sterling is now up 0.2% at $1.2925 after its earlier dip.
The depth of the financial crisis is one reason why the recovery has been record breaking for markets, suggests Will Hobbs, Head of Investment Strategy at Barclays Smart Investor:The depth of the financial crisis is one reason why the recovery has been record breaking for markets, suggests Will Hobbs, Head of Investment Strategy at Barclays Smart Investor:
Liquidity and sentiment are overestimated factors in this Bull Run. The strength and length of this bull market has its origins in the severity of the downturn a decade ago. The related decline in US corporate profits in 2008/09 was the largest proportionate fall on record, larger even than that seen in the Great Depression. However, the cause of this dramatic fall in earnings was also the seed of their dramatic bounce. Write downs of financial assets at banks, insurers and some large manufacturers with substantial financing departments trounced corporate earnings as they travelled from balance sheet through the profit and loss statement. However, such write downs were only ever going to have a transitory effect, once the write downs stopped, the weight was lifted and earnings flew.Liquidity and sentiment are overestimated factors in this Bull Run. The strength and length of this bull market has its origins in the severity of the downturn a decade ago. The related decline in US corporate profits in 2008/09 was the largest proportionate fall on record, larger even than that seen in the Great Depression. However, the cause of this dramatic fall in earnings was also the seed of their dramatic bounce. Write downs of financial assets at banks, insurers and some large manufacturers with substantial financing departments trounced corporate earnings as they travelled from balance sheet through the profit and loss statement. However, such write downs were only ever going to have a transitory effect, once the write downs stopped, the weight was lifted and earnings flew.
Essentially the record-breaking nature of the recession experienced by the US and world economy between 2008 and 2009 perhaps always suggested that the recovery from those depths would be similarly record breaking in nature. The fact that private sector scar tissue and a suitably chastened banking sector are only just starting to more visibly recover is among the factors suggesting that there is scope for this recovery to go further yet – the wild cyclical hubris that tends to precede the worst recessions is so far substantially absent.Essentially the record-breaking nature of the recession experienced by the US and world economy between 2008 and 2009 perhaps always suggested that the recovery from those depths would be similarly record breaking in nature. The fact that private sector scar tissue and a suitably chastened banking sector are only just starting to more visibly recover is among the factors suggesting that there is scope for this recovery to go further yet – the wild cyclical hubris that tends to precede the worst recessions is so far substantially absent.
And here are the opening calls for Wall Street:And here are the opening calls for Wall Street:
US Opening Calls:#DOW 25787 -0.14%#SPX 2856 -0.21%#NASDAQ 7384 -0.17%#IGOpeningCallUS Opening Calls:#DOW 25787 -0.14%#SPX 2856 -0.21%#NASDAQ 7384 -0.17%#IGOpeningCall
The record on the S&P 500 on Tuesday was not mimicked by the Dow Jones Industrial Average, which is still below its high point:The record on the S&P 500 on Tuesday was not mimicked by the Dow Jones Industrial Average, which is still below its high point:
#SPX high is an intraday high not a closing high, while DOW still 1000 pts below its record. Distinction btwn closing & intraday highs can useful as we saw in case of #FTSE in false May high which was intraweek not closing week high before the correction #forex#SPX high is an intraday high not a closing high, while DOW still 1000 pts below its record. Distinction btwn closing & intraday highs can useful as we saw in case of #FTSE in false May high which was intraweek not closing week high before the correction #forex
Meanwhile the dollar is slipping back, with the dollar index down 0.3% to its lowest since the start of the month.Meanwhile the dollar is slipping back, with the dollar index down 0.3% to its lowest since the start of the month.
Wall Street is expected to open slightly lower, with the Dow Jones futures suggesting a 25 point dip and the S&P 500 down 4 points. Even so, European markets are managing to hold onto their - slight - gains, with the UK’s leading index up 0.38%. Artjom Hatsaturjants, Research Analyst at Accendo Markets, said:Wall Street is expected to open slightly lower, with the Dow Jones futures suggesting a 25 point dip and the S&P 500 down 4 points. Even so, European markets are managing to hold onto their - slight - gains, with the UK’s leading index up 0.38%. Artjom Hatsaturjants, Research Analyst at Accendo Markets, said:
The FTSE100 is refreshingly bullish, building on the positive example set by Wall St [overnight], with considerable support from FTSE’s heavyweight energy sector after last night’s unexpectedly large build in API Oil Inventories. Lower sterling, weakened by disappointment over lack of Brexit progress, is helping many international stocks, but note that defensive shares are at the forefront of today’s positive run, hinting at a still tentative market attitude. News of Donald Trump’s potential troubles with the law over the Michael Cohen affair are so far having a rather limited impact on London shares.The FTSE100 is refreshingly bullish, building on the positive example set by Wall St [overnight], with considerable support from FTSE’s heavyweight energy sector after last night’s unexpectedly large build in API Oil Inventories. Lower sterling, weakened by disappointment over lack of Brexit progress, is helping many international stocks, but note that defensive shares are at the forefront of today’s positive run, hinting at a still tentative market attitude. News of Donald Trump’s potential troubles with the law over the Michael Cohen affair are so far having a rather limited impact on London shares.
European markets have managed to struggle into positive territory, but the moves are not exactly convincing. Connor Campbell, financial analyst at Spreadex, says:European markets have managed to struggle into positive territory, but the moves are not exactly convincing. Connor Campbell, financial analyst at Spreadex, says:
With the pound reversing some of its recent growth the FTSE was able to crawl out of the red on Wednesday.With the pound reversing some of its recent growth the FTSE was able to crawl out of the red on Wednesday.
The return of Brexit concerns to the forefront of investors’ minds – inspired by Michel Barnier warning that the UK and EU were unlikely to reach the October deadline set by the European Council – undermined sterling’s recent gains. Against the dollar, which still isn’t back to its best, the pound slipped 0.2%, sending cable to $1.288, while against the euro sterling fell as much as 0.4%, leaving it at its worst price in almost a fortnight.The return of Brexit concerns to the forefront of investors’ minds – inspired by Michel Barnier warning that the UK and EU were unlikely to reach the October deadline set by the European Council – undermined sterling’s recent gains. Against the dollar, which still isn’t back to its best, the pound slipped 0.2%, sending cable to $1.288, while against the euro sterling fell as much as 0.4%, leaving it at its worst price in almost a fortnight.
This, alongside a return to growth from the majority of its oil and mining stocks – Antofagasta was the only real notable exception – allowed the FTSE to join its Eurozone peers on the green side of the board. The UK index rose 0.3%, and is once again teasing 7600, while the DAX nudged 0.1% higher and the CAC jumped 0.2%.This, alongside a return to growth from the majority of its oil and mining stocks – Antofagasta was the only real notable exception – allowed the FTSE to join its Eurozone peers on the green side of the board. The UK index rose 0.3%, and is once again teasing 7600, while the DAX nudged 0.1% higher and the CAC jumped 0.2%.
Oil is heading higher after a drop in US inventories, as well as on the prospect of the renewed US sanctions on Iran curtailing supplies from the third largest producer in Opec.Oil is heading higher after a drop in US inventories, as well as on the prospect of the renewed US sanctions on Iran curtailing supplies from the third largest producer in Opec.
Last week’s fall in US stocks of 5.2m barrels announced by the American Petroleum Institute after the market closed on Tuesday was more than three times the decline expected by analysts.Last week’s fall in US stocks of 5.2m barrels announced by the American Petroleum Institute after the market closed on Tuesday was more than three times the decline expected by analysts.
The weakness of the dollar is also helping support the oil price, with Brent crude up 1.5% at $73.74 a barrel.The weakness of the dollar is also helping support the oil price, with Brent crude up 1.5% at $73.74 a barrel.
The latest problems for Donald Trump will be cheered or jeered depending on your point of view, but markets seem unsettled by a threat to the US president. Joshua Mahony, market analyst at IG, explains:The latest problems for Donald Trump will be cheered or jeered depending on your point of view, but markets seem unsettled by a threat to the US president. Joshua Mahony, market analyst at IG, explains:
Michael Cohen’s implication of Donald Trump in criminal activity may not put the president behind bars, but it has certainly riled markets, with traders shifting out of the dollar and stocks....While Trump is one of the most divisive presidents in history, markets have certainly taken to his economic expansionary policies and any threat to his second term will likely hit markets. With US mid-terms coming up in November, the continued scandal surrounding Trump’s presidency will dent confidence even though a Republican win is near-enough nailed on due to gerrymandering.Michael Cohen’s implication of Donald Trump in criminal activity may not put the president behind bars, but it has certainly riled markets, with traders shifting out of the dollar and stocks....While Trump is one of the most divisive presidents in history, markets have certainly taken to his economic expansionary policies and any threat to his second term will likely hit markets. With US mid-terms coming up in November, the continued scandal surrounding Trump’s presidency will dent confidence even though a Republican win is near-enough nailed on due to gerrymandering.
It’s not a particularly busy day for company news, but two businesses at least will be wishing they were not in the headlines.It’s not a particularly busy day for company news, but two businesses at least will be wishing they were not in the headlines.
There is yet another problem for Ryanair, which has been sending out compensation cheques with no signatures. Unsurprisingly, these have bounced.There is yet another problem for Ryanair, which has been sending out compensation cheques with no signatures. Unsurprisingly, these have bounced.
Ryanair apologises after compensation cheques bounce
And Superdrug is the latest business to be targeted by hackers:And Superdrug is the latest business to be targeted by hackers:
Superdrug targeted by hackers who claim to have 20,000 customer details
European markets are drifting rather aimlessly at the moment, lost in a summer lull despite Wall Street’s new records, the US-China trade talks and the political developments in the US.European markets are drifting rather aimlessly at the moment, lost in a summer lull despite Wall Street’s new records, the US-China trade talks and the political developments in the US.
The FTSE 100 is virtually flat, down just 0.07%, while both Germany’s Dax and France’s Cac have edged into positive territory.The FTSE 100 is virtually flat, down just 0.07%, while both Germany’s Dax and France’s Cac have edged into positive territory.
Meanwhile the dollar, which was hit on Tuesday by Donald Trump slamming the Federal Reserve for its policy of raising interest rates, seems to be steadying.Meanwhile the dollar, which was hit on Tuesday by Donald Trump slamming the Federal Reserve for its policy of raising interest rates, seems to be steadying.
So the pound is down 0.18% at $1.2875 while the euro has dipped 0.1% to $1.1563 after earlier hitting two week highs.So the pound is down 0.18% at $1.2875 while the euro has dipped 0.1% to $1.1563 after earlier hitting two week highs.
The expected dip in US markets looks like the right reaction to the latest Trump travails, says Paul Donovan at UBS:The expected dip in US markets looks like the right reaction to the latest Trump travails, says Paul Donovan at UBS:
US President Trump faces either double trouble (Cohen and Manafort) or a witch hunt, depending on your perspective. Does this matter for markets? It might matter if the president’s political capital with Congress was undermined, affecting policy. However, the president does not have that much political capital with Congress, and is not asking Congress to pass laws they do not want to pass. It might matter if markets think the politics will change the midterm election results (or the risks around those results), and thus policy. However, Republicans may successfully try to separate themselves from Trump. Trump supporters may be motivated to turn out and vote. This impact on midterms is not certain. It might matter if trade policy is used to distract attention from the domestic politics. The US president has considerable authority over trade, and taxing US consumers via trade tariffs can be made to serve the “Make America Great Again” slogan. Overall, the muted market reaction seems appropriate.US President Trump faces either double trouble (Cohen and Manafort) or a witch hunt, depending on your perspective. Does this matter for markets? It might matter if the president’s political capital with Congress was undermined, affecting policy. However, the president does not have that much political capital with Congress, and is not asking Congress to pass laws they do not want to pass. It might matter if markets think the politics will change the midterm election results (or the risks around those results), and thus policy. However, Republicans may successfully try to separate themselves from Trump. Trump supporters may be motivated to turn out and vote. This impact on midterms is not certain. It might matter if trade policy is used to distract attention from the domestic politics. The US president has considerable authority over trade, and taxing US consumers via trade tariffs can be made to serve the “Make America Great Again” slogan. Overall, the muted market reaction seems appropriate.
US markets are set to open lower but this will not prevent the record bull market run. Michael Hewson, chief market analyst at CMC Markets UK, says:US markets are set to open lower but this will not prevent the record bull market run. Michael Hewson, chief market analyst at CMC Markets UK, says:
The divergence in US markets continued overnight with a marginal new record high for the S&P 500, as well as new records for the Russell 2000 and the Dow Jones transportation index, before slipping back into the close, but still on course for the longest bull market run in history.The divergence in US markets continued overnight with a marginal new record high for the S&P 500, as well as new records for the Russell 2000 and the Dow Jones transportation index, before slipping back into the close, but still on course for the longest bull market run in history.
This failure to push on higher, as buying momentum stalled, along with the news that President Trump’s former lawyer, Michael Cohen, pleaded guilty to violating campaign finance laws by arranging hush payments to two women Trump was alleged to have had affairs with, could well see investors look to take some profits today after a fairly mixed session in Asia and a lower open in Europe.This failure to push on higher, as buying momentum stalled, along with the news that President Trump’s former lawyer, Michael Cohen, pleaded guilty to violating campaign finance laws by arranging hush payments to two women Trump was alleged to have had affairs with, could well see investors look to take some profits today after a fairly mixed session in Asia and a lower open in Europe.
Cohen’s plea, which puts the President under the spotlight even more, and opens him up to charges of criminal conduct, has raised concerns that he might be vulnerable to impeachment in the coming months. While this is unlikely in the short term, any shift in the balance of power after the mid-terms in November, could increase that prospect if the Republicans lose their majorities.Cohen’s plea, which puts the President under the spotlight even more, and opens him up to charges of criminal conduct, has raised concerns that he might be vulnerable to impeachment in the coming months. While this is unlikely in the short term, any shift in the balance of power after the mid-terms in November, could increase that prospect if the Republicans lose their majorities.
Meanwhile Trump may have played down the prospects of early progress in the US-China trade talks, but a spokesman from China’s foreign ministry said it hoped there would be a good outcome.Meanwhile Trump may have played down the prospects of early progress in the US-China trade talks, but a spokesman from China’s foreign ministry said it hoped there would be a good outcome.
Despite the record breaking run on Wall Street, European markets have opened lower as investors take note of the latest political developments in the US which could cause problems for president Trump.Despite the record breaking run on Wall Street, European markets have opened lower as investors take note of the latest political developments in the US which could cause problems for president Trump.
The FTSE 100 is currently down 0.24%, Germany’s Dax is down 0.23%, France’s Cac is off 0.08%, while Italy’s FTSE MIB is 0.33% lower.The FTSE 100 is currently down 0.24%, Germany’s Dax is down 0.23%, France’s Cac is off 0.08%, while Italy’s FTSE MIB is 0.33% lower.
The previous record bull market for the US ran from October 1990 to March 2000 and encompassed the dotcom boom - and ended with that bubble bursting. Laith Khalaf, senior analyst at Hargreaves Lansdown, says:The previous record bull market for the US ran from October 1990 to March 2000 and encompassed the dotcom boom - and ended with that bubble bursting. Laith Khalaf, senior analyst at Hargreaves Lansdown, says:
The US market has now been on a rampant charge since March 2009 with only a few blips along the way.The US market has now been on a rampant charge since March 2009 with only a few blips along the way.
Many question whether this exceptional period for the US stock market is going to end in tears, though the very fact this issue is so widely raised suggests we are not in the throes of the irrational exuberance of the late 1990s.Many question whether this exceptional period for the US stock market is going to end in tears, though the very fact this issue is so widely raised suggests we are not in the throes of the irrational exuberance of the late 1990s.
European indices set for weaker open. #Trump under pressure after #Manafort and #Cohen cases. #FTSE called 30 lowerEuropean indices set for weaker open. #Trump under pressure after #Manafort and #Cohen cases. #FTSE called 30 lower
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
US markets continue to hit new highs, with the S&P 500 reaching a record intra-day high of 2873.23. It also equaled its longest ever bull market run of 3,452 days, helped by strong corporate earnings - not least from technology stocks - and hopes that a trade war between China and the US can be avoided. Talks are due this week between representatives of the two sides, even if President Trump has played down the prospects of any imminent success.US markets continue to hit new highs, with the S&P 500 reaching a record intra-day high of 2873.23. It also equaled its longest ever bull market run of 3,452 days, helped by strong corporate earnings - not least from technology stocks - and hopes that a trade war between China and the US can be avoided. Talks are due this week between representatives of the two sides, even if President Trump has played down the prospects of any imminent success.
But European markets are set to open lower as political risks in the US appear to be growing. Jasper Lawler, head of research at London Capital Group, said:But European markets are set to open lower as political risks in the US appear to be growing. Jasper Lawler, head of research at London Capital Group, said:
August has been a remarkable month so far for US equities. Apple became the first trillion-dollar company, the S&P reached a remarkable milestone, touching a fresh intraday high and today this current bull run will break a record for its duration.August has been a remarkable month so far for US equities. Apple became the first trillion-dollar company, the S&P reached a remarkable milestone, touching a fresh intraday high and today this current bull run will break a record for its duration.
Yet despite the numerous records and positive close on Wall Street, Asian markets and European futures moved lower, tracing US futures lower, in response to heightened US political risk. In a catastrophic day for President Trump, his personal lawyer Michael Cohen pleaded guilty, possibly implicating the US President on legal issues and Trump campaign chairman Paul Manafort was also convicted; events which have understandably unnerved investors. The overriding fear here is that something could come out linked to Trump. US domestic political issues are in danger of overshadowing the revival of the US- Chinese trade talks.Yet despite the numerous records and positive close on Wall Street, Asian markets and European futures moved lower, tracing US futures lower, in response to heightened US political risk. In a catastrophic day for President Trump, his personal lawyer Michael Cohen pleaded guilty, possibly implicating the US President on legal issues and Trump campaign chairman Paul Manafort was also convicted; events which have understandably unnerved investors. The overriding fear here is that something could come out linked to Trump. US domestic political issues are in danger of overshadowing the revival of the US- Chinese trade talks.
The opening calls for Europe show:The opening calls for Europe show:
European Opening Calls:#FTSE 7548 -0.24%#DAX 12361 -0.19%#CAC 5400 -0.17%#MIB 20690 -0.45%#IBEX 9523 -0.27%European Opening Calls:#FTSE 7548 -0.24%#DAX 12361 -0.19%#CAC 5400 -0.17%#MIB 20690 -0.45%#IBEX 9523 -0.27%