Japanese industrial production may have slumped at a faster-than-expected speed in February (-6.2% m/m) according to the preliminary figure. The Nikkei and the Topix sold-off in Tokyo, while the USDJPY eased back to 112.25. As we are approaching the month/quarter end, the USDJPY could be an interesting buy on dips into the 110.60 (March low) starting from April due to a relocation of the yen repatriated for the end of the quarter and also on the anticipation of a looser fiscal policy from Abe's government.
Dollar gives up the ghost
The strong dollar gave up the ghost yesterday in the aftermath of Yellen’s fairly dovish speech. The use of the word ‘gradual’ and the need to proceed ‘cautiously’ given global risks was construed by the markets as a signal that further monetary tightening was by no means imminent. The biggest hit came certainly from Yellen's suspicion on 'more slack in the labour market than obvious from unemployment rate' and on the FOMC's limited ability to respond through conventional policies given the very low level of interest rates. The expectation for the next Fed hike has been pushed to November.
This has naturally led to some yield seeking in risk assets and the ‘Dovish Janet’ effect on global indices has been palpable with the S&P500 finally breaking above 2050 and European indices following the lead this morning. EURUSD is also bid and should capture additional gains in the absence of ECB jawboning. It presently trades at 1.1324. German preliminary CPI may add its own brand of volatility – the HICP number is expected to show 0.7% month on month gain while remaining flat on an annual basis.
Equity markets surge
The equity bulls will be cheering Janet Yellen today as the FTSE trades up 1.32% with all sectors capturing gains. Leading the way is the materials sector as commodities received a boost on the back of the weaker dollar. The volatility in these individual mining stocks cannot be overstated – with very wild swings in the likes of Anglo American and Glencore since the beginning of the year. Sustainability is the key here, yet fundamentally it would seem that little has changed in respect of demand.
Market remain at the mercy of central banks and it is ultimately dollar direction that will dictate market moves for the time being.
Copper prices are little changed- trading at $2.19/lb and still below that key 200 day moving average.
Gold recouped some of its recent losses yesterday but now oscillates in the mid-point of its recent range, unwilling to break below $1200/oz and equally uncomfortable with the idea of breaking above $1300/oz- the key resistance point.
Anglo American +7.53%
BHP Billiton +5.41%
Rio Tinto +5.18%
Standard Chartered (+6.29%) is consolidating near its lows – a high riser on the day but ultimately still at the mercy of emerging market growth. It has received a buy rating by Berenberg bank. The bank set a target price of 750p on the company’s stock
Marks and Spencer (-1.36%) has been cut to hold at Jeffries. Growing unemployment fears risk, weaker consumer confidence are all the reasons given. Clearly the potential Brexit issues are already starting to be felt and risk is being adjusted accordingly.
Next (flat) has been upgraded to hold at Jeffries.
Carnival (0.19%) due to release H1 earnings at 1.15pm. Under pressure since the beginning of the year, the stock has rebounded. Analysts expect the company to announce earnings of $0.32 per share for the quarter. CCL has been the subject of a number of analyst reports. HSBC reaffirmed a “buy” rating and issued a GBX 4,500 ($64.07) price target on shares of Carnival plc in a research note on Wednesday, January 6th. Natixis boosted their price target on Carnival plc and gave the company a “buy” rating in a research note on Monday, December 21st. Deutsche Bank reaffirmed a “buy” rating c in a research note on Wednesday, December 16th.
The ADP employment is due today and the consensus is 195K private jobs added in March vs 214K a month ago. The NFP guesses in the most recent Bloomberg survey retreated to 205K from 208k yesterday. A soft ADP read could leave the US dollar in bears' hands before Friday's NFP print.
Given recent correlations in the oil price to equity indices, crude oil inventories will be closely watched later this afternoon. Both WTI and Brent are higher this morning, adding 1.38% and 1.07% respectively – much of the gain can be attributed to the softer greenback and a fairly consensus view that the recent rally has been little more than a reversion to mean. A build of 3.1m is expected – somewhat less than the 9.4m stash shown last week which marked historically high levels for the time of year.
We call the Dow Jones higher 90 points higher to 17723.
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US & European futures fall following another White House resignation Whilst US indices managed to book a positive finish overnight, the futures are tanking as the revolving door at the White House is once again in action. The resignation of Trump’s top eco…Read more
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US equity markets continued their Powell inspired sell off overnight, as risk aversion dominated and investor concerns over a faster pace of tightening at the Fed continued to weigh on Wall Street. The Dow ended the session 380 points lower, whilst the S&P…Read more
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Upbeat start to event packed week
European markets look set to start the new and event-packed week on a positive note. The move higher comes following a generally upbeat session in Asia overnight and a strong end to the previous week on Wall Street, which saw…Read more
FOMC minutes confuse the market
The eagerly awaited minutes from the FOMC January meeting were released on Wednesday evening. The release was more closely watched than usual given recent market conditions, which have seen rising inflation and interest rate co…Read more
Despite positive trading in Asia overnight, Europe is seen taking its lead from the US, which closed lower under the weight of a late sell off in Tech stocks and a large scale move out of Walmart.
Wall Street closed lower for the first time in 7 sessions, …Read more
US equity indices closed the overnight higher after reversing opening losses. Wall Street added a fourth day to the winning streak, even as bond yields rose following stronger than forecast inflation data, but weaker retail sales. The Dow closed 250 points hi…Read more
Figures showing hotter than anticipated US inflation in January produced, upon first glance, a surprising reaction in global markets. Higher US inflation, which by its nature should mean higher US interest rates led to a sell-off in the US dollar and a rally i…Read more
A fresh bout of selling hit Wall Street overnight sending US equity indices plummeting once again. For the second time in less than a week, the Dow plunged by over 1000 points, closing 4.2% lower, in its second worst point drop in history (the biggest being on…Read more
After record losses were posted on Wall Street on Monday, US equity indices manged to finish the session higher overnight. The Dow Jones turned an initial 500 plus point loss into a 567-point gain, clawing back around half of the 1,100 points wiped out in Mond…Read more
European stocks are headed sharply lower start thanks to the weak lead given to them by Wall Street. The FTSE 100 is set to open just above its December lows. The next day after an unusually big sell-off is always a big test of a market’s strength. A repeat of…Read more
arkets participants found themselves in the rare position of witnessing falling prices this week. It has naturally sparked questions of whether a larger correction is in store. The Dow Jones has pulled back 3% while the FTSE 100 has dropped nearly 4.5%. These …Read more
US markets rebounded on Wednesday boosted by better than expected earnings, recovering from a heavy two day sell off at the beginning of the week. The Dow closed 72 points higher, whilst the S&P and Nasdaq both increased 0.1%. A fitting way to end the mont…Read more
Eurozone Growth on solid footing
Eurozone growth remained solid in the fourth quarter. EZ Q4 GDP hit 0.6% q/q and accelerated to 2.7% y/y, up from 2.6% in Q3. The Eurozone economy grew by 2.5% in 2017, up from 1.8% in 2016. Eurozone growth was faster than …Read more
Wall Street opens 2018 with fresh records
Wall Street opened up 2018 with record highs, boosted by energy, tech and consumer discretionary sectors. S&P 500 and Nasdaq indices hit record intraday and closing highs. The rise in tech stocks helped the Nasdaq…Read more
US markets paused for breath on Wednesday, after the Senate approved the long-awaited US tax reform bill, and the House of Representatives passed the bill again, owing to a procedural snag. The Dow finished down 0.1%, the S&P declined 0.08% and the Nasda…Read more
A quick summary of key global dynamics that could change in 2018. We discuss politics, economics, central banks, markets and the potential impact on market pricing. Topics include Bitcoin, FAANG stocks, inflation and gold.
A Tory Party lea…Read more
Stocks drift lower while awaiting US tax bill
Markets started out on the back foot and drifted for most of the afternoon. The dip-buyers that have stepped in throughout the year failed to materialise, fearing the ticking clock on US tax reform. Until tax re…Read more
US Markets Finished Steady As Investors Await Details on the Tax Reform
Wednesday’s US session had a definite wait and see feel about it. The Dow closed marginally lower and the S&P 500 flat, as investors paused, waiting for more details on what the rec…Read more
Stocks in Europe have had a generally positive open on Monday. While geopolitical risk looks to be on the rise, hopes of deregulation led by the US is helping a risk-on mood. Spanish equities are bucking the trend on Monday, with the IBEX index opening lower a…Read more
The unusually smooth bailout of a big Spanish bank and upwardly-revised OECD global growth forecasts helped create an aura of stability in markets. The stability was perhaps inevitable on the eve of what stands to be a very eventful day on Thursday.
Banco …Read more
The FTSE 100 first dived to 7489p then rebounded past 7525p at the London open. Fresnillo rallied past 2% as gold extended gains.
Lloyds (+0.97%) shares were well bid, as Britain sold its remaining stake in the bank, emotionally marking the end of a painfu…Read more
Hopes of owning a part of the next internet giant propelled Snap shares over 40% higher on its first day of trading - but investor confidence has cratered since. Snap’s maiden earnings will set the tone for investor expectations moving forward.
Hello, welcome to LCG’s look ahead to the key events in markets for the week starting April 3rd, 2017. The video edition will return next week, and in a new location!
Stock markets are consolidating near recent peaks and the big question is whether th…Read more
Stocks were under pressure on Monday following the collapse of Donald Trump’s first attempt to overturn Obamacare. For many, the healthcare bill has been the moment that crystallised the risk of economic failure under The Donald. Ironically, the reacti…Read more
Slow burn in markets
The anticipation of a busy week ahead including the possible triggering of Article 50, a potential populist revolt in the Dutch national election and a likely US interest rate hike meant there was a slow burn in markets on Monday.
… Read more