Pound and Stocks fall as geopolitics weighs

Summary:

• GBPUSD falls to 1-month low below $1.22 as Brexit concerns weigh

• Most indices in the red as US-China hopes fade

• Domino’s recovers after earnings miss

• DE30 falls below 12000

The pound is the worst performing major currency today, dropping against all its peers as any hopes that the UK and EU will agree upon a new Brexit deal seem to be slipping away. The rhetoric from both sides has become increasingly hostile with each party looking to blame the other for the failure to make any progress. The largest declines for GBP can be seen against NZD, CHF and JPY with these crosses all lower by 1% or more on the day while the GBPUSD has dipped below the $1.22 handle to trade at its lowest level in 5 weeks. Traders should keep an eye on any further Brexit headlines while the USD could be sensitive to a speech from Fed chair Powell this evening scheduled at 7:30 PM (BST).

Political tensions are also having an adverse impact on stocks as  Hopes for a major breakthrough on the US-China trade front this week are looking increasingly mis-placed after the Trump administration announced overnight that 8 Chinese tech giants would be blacklisted. China are expected to retaliate against the move and these latest developments don’t appear to be the sort that would occur shortly before tangible progress is made.

One stock that is attracting unwanted attention this afternoon is Dominos Pizza after the firm announced a largely disappointing set of results. Earnings per share for the fiscal 3rd quarter was $2.05 below the Street’s estimate of $2.07. Revenue also missed, coming in a t $820.8M vs 823.9M exp. While net sales rose by 4.4%, this was less than expected.  The pizza chain now expects U.S. same-store sales growth in a range of 2% to 5%, down from a prior range of 3% to 6%. The outlook for international same-store sales growth was slashed from a range of 3% to 6% to a range of 1% to 4%. Shares began sharply lower somewhere in the region of 5% but buyers have stepped in and the stock is back in the green by the European close. 

The German DE30 failed to break above the resistance zone ranging below the 50% Fibo level (12150 pts) of the latest major downward impulse this morning and the market has continued lower to trade back below the psychological 12000 level. The index has moved off its lows into the cash close but is still just shy of the big round number at the time of writing.