Joshua Mahony MSTA
Scope Markets
News of a subpoena issued to the Trump administration has provided a drag for the US dollar, with the EUR and GBP gains driving European stocks lower. Meanwhile, Carillion has plummeted amid another raft of bad news
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European stocks falter amid dollar decline
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Subpoena brings resurgent risk-off mood
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Carillion shares plummet amid profit warning
European markets are looking to close out the week in a somewhat downbeat fashion, with the sharp gains of yesterday giving way to a more uncertain outlook after the deterioration in the US dollar helped push European FX appreciation. News of a subpoena for information relating to the Russia investigation from the Trump administration has provided a significant drag on the dollar as the political instability story comes back out the woodwork. Amid the risk of heightened US political volatility, it comes as no surprise that we are seeing gold gaining ground, with sharp overnight gains being accompanied by an appreciation in the Japanese yen.
Carillion has been today's big story, with the firm seeing 34% wiped from its share price in the wake of yet another profit warning, and an impending loan covenant breach. This represents the latest in a series of negative stories throughout the past year, with the share price falling almost 90% in the past 12-months. Despite imposing a raft of measures to cut costs and raise cash, the firm has failed to act within the earnings to net debt ratio agreed with the banks, raising the need for further investment.
Ahead of the open we expect the Dow Jones to open 38 points lower, at 23,420.
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