Financial market research and analysis

US stocks rebounded sharply on Thursday after China pushed back against reports that is was considering halting purchases of US debt. A rally in the energy sector also ensured the S&P 500 returned to its winning ways, hitting yet another record high overnight. The S&P jumped by 0.7% to a new all-time high of 2767. Energy stocks dominated the upper reaches of the index, with the S&P energy sector soaring 2.7% through the session, as it traced the price of oil higher. Brent traded over $70 per barrel, it highest level since 2014.

The Dow also charged northwards, gaining over 200 points whilst hitting another record high of 25511, as investors bet that global growth will pick up steam going forwards. Finally, the Nasdaq added a further 0.7% also taking it to a record high.

Earning season begins

Overall there is a lot of optimism built into the market right now and investors are keenly waiting for the star of earning season today, to see whether this optimism is correctly placed. Q4 earning season kicks off with JP Morgan Chase, Wells Fargo and BlackRock. These three stocks have all outperformed the market over recent weeks and that is a strong sign that investors are expecting a lot from them.

Fresh record highs in Europe? Oil hits 4 year high – rig count moves into focus

European indices are poised to extend their gains on Friday, with futures markets pointing a to a positive start. A fresh record high could be on the cards for the FTSE, giving it a bumper finish to the week. As Brent continues to hover around a four-year high and WTI eases back from $64, heavy weight energy stocks are likely to remain in focus for a second session. Investors will look towards the US Baker Hughes Rig count for confirmation and support of these multiyear high levels.

Third time lucky for Bovis?

The UK corporate calendar is almost empty on Friday with investors looking towards Bovis for some excitement. The house builder has issued profit warnings for the past two years, investors will be hoping its third time lucky for the group, which is in the process of being turnaround by new CEO Greg Ftizgerald. Investors will be paying particular attention to Bovis’ progression towards new strategic targets and also to the health of the balance sheet. Following a strict balance sheet review investors will looking for signs of greater cash generation at Bovis to support the higher dividend pledge for 2018.

US inflation to send the dollar lower?

The UK and the eurozone have little in store on the economic calendar. Over in the US inflation will remain in focus. On Thursday, inflation at factory level came in lower than expected, ensuring the return of the “inflation mystery” concerns. Today consumer prices will reveal whether inflation is picking up towards the Fed’s 2% target. Weak inflation has been a concern at the Fed for some time now and could start to impact on the prospects of interest rate rises in 2018. A reading below the 1.7% core inflation forecast could unnerve investors and weigh on a weak dollar, already suffering the effects of soft ppi inflation figures. Finally, US retail sales could also inject some volatility into the markets.

The dollar is looking to test 91.50 versus a basket of currencies. Weaker than expected readings from US inflation could open the door towards 91.00.