It’s been a subdued start to the week for markets in Europe, following on from a weak Asia session, with a predominantly softish tone all round, as investors indulge in mild profit taking after the strong gains of the last couple of weeks.
Europe
On the plus side online estate agent Rightmove shares are among the best performers today, rising to 5-week highs after upgrading its full year outlook for revenue growth and average revenue per advertiser (ARPA) to 8% to 10% and £112 to £116, respectively.
In October Rightmove shares fell sharply on the back of the news that US based CoStar had bought its rivals OnTheMarket for £99m, or 110p in cash, raising concern that its now better resourced competitor would eat into its own market share. Today’s upgrade to ARPA is very welcome, especially given the challenges facing the UK housing market which is facing its most challenging period since 2008.
Aviva announced today that has acquired Canadian car insurance business Optiom for £100m as it looks to strengthen its business in the Canadian market. After years of trying to improve shareholder returns by withdrawing from non-core markets management appear to have shifted their thinking and are now looking to enhance their core business of UK, Ireland, and Canada.
On the downside, gambling stocks have slipped back after Goldman Sachs downgraded Entain due to concerns over online sales growth, particularly in its BetMGM US brand. Flutter entertainment is also lower.
Also slipping back are the oil companies due to lower crude oil and gas prices, while health care is also underperforming with AstraZeneca shares slipping to a 52-week low.
There’s been little to no reaction to the announcement that GSK’s phase 3 trial of its Blenrep and BorDex, drugs for the treatment of refractory myeloma has seen positive results.
US
US markets opened slightly lower on the back of a softer European market session, on this Cyber Monday with the focus on US retailers after Adobe Analytics reported that US consumers had spent $9.8bn online on Black Friday, a 7.5% increase on the same period last year.
Adobe went on to say that consumers were taking advantage of buy now pay later program (BNPL) plans with an 18.8% increase on Cyber Monday spend over the same period last year, with shares in Visa, Walmart, Target, Shopify, and Amazon all in focus.
US new home sales for October painted a picture of a housing market where demand remains on the weak side, sliding -5.6%, while September home sales were revised lower to an 8.6% increase.
FX
It’s been a predominantly soft session for the US dollar, losing ground against the Japanese yen, however it has managed to hold up against the euro on comments from an ECB insider that the next likely move on rates could well be a cut, although it was emphasised that any cut wouldn’t come soon.
The pound is continuing to find a bid after Bank of England governor Andrew Bailey re-emphasised the central bank’s commitment to return inflation to its 2% target, despite what the governor called the worst growth outlook that he’d seen in his lifetime. While Bailey was uniformly downbeat recent economic data has showed that the UK economy has started to show signs of picking up after the poor performance in Q3, and it is this that has also helped boost the pound in the last few days, as rate cut expectations get pushed back.
Commodities
Crude oil prices have continued to look soft, having declined for 3-days in a row, although further downside could be limited ahead of this week’s OPEC+ meeting as traders mull the idea that we might see further cuts in output from the cartel against a backdrop of concern over the demand outlook. Disputes over quotas have meant the date for the meeting has been put back to Thursday and it could well be that further agreement over output reductions could meet some resistance.
Gold prices have been one of the main beneficiaries from the belief that the US Federal Reserve is done when it comes to the prospect of further rate hikes. Today we’ve seen the yellow metal hit a new 6-month high, above $2,000 an ounce, with the next key resistance at the $2,045 area. With support back at the $1,980 level the main obstacle to a retest of the record highs this year would be if US yields started to see a sustained rebound from their lows of last week.
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