Financial market research and analysis

Dire from HSS Hire, Europe confident

Relief returned to markets on Wednesday after two-days of concern over North Korean missile threats and the huge damage inflicted on Dallas Texas by tropical storm Harvey. Equity benchmarks remain down for the week in a sign that investor sentiment is still fragile. 7300 is proving to be decisive support in the FTSE 100 while the DAX is back above 12,000.

Stocks: Coop to buy Nisa, Dire outlook from HSS Hire

Shares of Sainsbury’s were amongst the top risers on the FTSE after the Co-op swooped in as a favourite bidder for convenience store chain Nisa. The rise in Sainsbury’s shares would suggest investors would rather Co-op do the deal. There’s a risk Sainsbury’s may be biting off more takeovers than they can chew so soon after the Argos deal.

Shares of HSS Hire crashed 20% after the company issued a profit warning on the back of “materially slower” sales in the second half of 2017. The poor results at HSS seem to be largely self-inflicted. The performance of tool-rental competitor Speedy Hire has been much better than HSS in 2017. Looking ahead, new chief executive Steve Ashmore seems to be putting his honeymoon period to good use. Ashmore’s cost-cutting plan can turn fortunes around so long as construction holds up in the post-Brexit environment.

Forex: Eurozone economic confidence pre-crisis high

Since striking the big 1.20 level against the dollar on Tuesday, the euro has been pulling back but not for any lack of decent economic news. Data on Wednesday showed Eurozone economic confidence hit pre-crises highs while at the same time Moody’s upgraded its economic growth forecast for the EU. Strong economic data like today’s, the ECB hinting at tapering QE and the absence of any populist threat has created a tidal wave of demand for euros.

A resurgent US dollar gained ground, sending the pound and the Japanese yen lower. Storm Harvy and North Korea have helped deflect attention away from Donald trump’s floundering economic agenda.

Commodities: Gasoline two-year highs could be short-lived

Gasoline prices are stuck at two-year highs as traders continue to price in crippled refining capacity in the regions affected by storm Harvey. The storm will have a lasting impact on the communities affected by the impact on markets could be more fleeting. We would expect gasoline prices to pullback and crude prices to recover as refining capacity comes back online.

Gold prices stabilised after pulling back from 8-month highs. The Most recent price surge in gold has been very event-driven so if the threat from North Korea is contained, prices will necessarily give back those gains. Still, in the context of a weakening US dollar, gold is well-positioned to hold above $1300 per oz.

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