The FTSE 100 renewed record regardless of the pound bulls. The index extended gains to 7480p, as Vodafone (+4.07%) rallied on solid results. The 7500p corner is just around the corner; neither the Brexit worries nor the stronger pound seem to weigh on the FTSE’s positive trend.
The opposition party leader Jeremy Corbyn is expected to unveil his plans today.
easyJet (-5.42%) shares plunged as the airline company reported a record, worse-than-expected first half loss. easyJet’s revenues were severely hit by the pound’s depreciation against the US dollar. However, the GBP-denominated company remained optimistic on its core business growth, the loyalty of its clients and said to invest $3.8 billion in new Airbus SE aircrafts. At her interview, the company CEO Carolyn McCall said that the Bloomberg headlines were ‘exaggerated’, highlighted that the fleet growth is ‘purposeful and strategic’, adding that there future options with Airbus are flexible both on the upside and the downside.
Cable recovered above to 1.2958 prior to the inflation data and is expected to remain well bid on the back of a faster than expected inflation report in April. The UK’s headline inflation advanced to 2.7% versus 2.6% expected, as the core inflation, excluding food and energy, may have bounced to 2.4% for the first time since October 2013.
The $1.30 hurdle is back on the radar. This being said, the rising inflationary pressures revived to a limited extent, given that in its Quarterly Inflation Report, the BoE warned that the inflationary pressures could increase throughout 2017, but should ease starting from next year.
Euro rallies to fresh six-month high
The EURUSD advanced to 1.1036 for the first time since the US presidential election.
The single currency surpassed the post-Macron peak, 1.1023 (post-Macron high), and is set to extend gains toward 1.1074 (minor 23.6% retrace on post-Trump sell-off).
The golden cross formation on the hourly chart (50-hour moving average crossed above the 200-hour moving average) encourages traders to buy into minor price pullbacks.
The main support to the continuation of the April – May positive momentum stands at 1.0925 (minor 23.6% retracement on April – May rise) and 1.0857 (major 38.2% retrace).
S&P500 recorded its highest close in history
The S&P500 closed yesterday’s session above $2’400 for the first time in record and is expected to open slightly softer at the US market open. The information technology and energy stocks are leading the index higher, while the banking stocks see limited demand as analysts readjust their inflation and rate expectations.
Although there has been no major news that could’ve demotivated the Fed hawks, the activity in the US sovereign markets hinted at a lower incentive to push the US dollar and the US yields higher.
The probability of a June interest rate hike eased to 97.5% after hitting 100% a week earlier.
The US 10-year yields hold the ground at the 2.30% level, yet the stagnation in the US yields drives the capital toward popular carry currencies, such as AUD and NZD and to non-interest bearing assets, such as gold.
Gold recovery has room before meeting mid-term sales
Gold extended gains to $1’237 on Monday and could be expected to aim for a further recovery towards $1’245/1’247 (major 38.2% retracement on April – May decline / 200-day moving average).
Soft US yields are supportive of the yellow metal in the near term. Softer June Fed rate hike expectations could encourage a short-term bullish reversal in gold this week.
Though, long-term investors would seek opportunities to sell the tops given that the Fed is still expected to raise interest rates two more times this year. Solid mid-term resistance is eyed at $1’255 and $1’264 (major 50% and 61.8% retrace on the recent fall).
China’s Belt and Road failed to boost markets, raised worries instead
The Chinese stocks gave back gains as the Belt and Road initiative bumped into major political and financial concerns. The Australian ASX 200 added a tiny 0.21%, as iron ore failed to hold on to the early bounce in prices.
The Chinese project seems to have missed the point and clearly failed to revive the global reflation story so far.
In one hand, China’s increasing influence on world economics prevent several world leaders including EU and India, from voicing further enthusiasm about the project. India even boycotted the ‘project of the century’ warning that the latter ignored ‘core concerns about sovereignty and territorial integrity’. On the other hand, investors are reluctant to jump in with both feet due to the capital controls and other financial restrictions imposed by the Chinese government.
Shanghai’s Composite (+0.74%) started the day in the negative territory, yet reversed gains into the session close.
The AUDUSD remained bid above the 0.7405, yet the recent debasement in iron ore prices remain a major concern for the Australia’s finances and it is fair to say that investors didn’t really buy into China’s massive investment projects.
In its most recent meeting minutes, the Reserve Bank of Australia warned that a strong AUD could complicate the economic adjustments.
Although, the current environment is plausible for carry traders, news that hedge funds are ‘giving up on the Australia dollar’ (source: Bloomberg) could keep the topside limited pre-0.7488/0.7500 (major 38.2% retrace / psychological resistance).
Finger Pointing At Russia and US inflation Lingering trade war concerns pulled the Dow Jones over 150 points lower overnight, as investors feared that a flawed trade policy could be as significant and damaging as a flawed monetary policy. Whilst key trading pa…Read more
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
Risk-on trading returns as trade war fears ease Wall Street finally snapped a four-day losing streak on Monday, although the exact reason behind the return of risk appetite was difficult to pinpoint. The Dow closed over 330 points higher, whilst the S&P 50…Read more
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
Wall Street showed no signs of giving up the recent rally, as it booked another positive close overnight; its third consecutive winning session. The continued stabilisation in interest rate expectations helped US equity indices hit a 4-week high, with the Dow…Read more
Italy will hold a general election on 4th March 2018. Last year this was being identified as one of the big risk events of 2018. Since then, the economic climate has changed dramatically in Italy, which is in turn reducing the risk attached to thi…Read more
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