Perhaps the market was overly pessimistic on the slew of corporate earnings. Everyone expected a weak first quarter for the banks but markets move on results versus expectations so the fact that JP Morgan delivered results that were slightly better than forecast has solidified the upside in equity indices and we now witness US indices at their best levels this year.
Gold is a casualty of this renewed risk sentiment. It’s down 0.6% this morning to $1235/oz; off the lows but still unable to really grapple with the $1300/oz level for the time being.
Singapore’s central bank unexpectedly eased its monetary stance, adopting a policy last used during the 2008 global financial crisis, as economic growth in the trade-dependent city-state ground to a halt. Gross domestic product posted zero expansion on an annualized basis in the first quarter compared with the previous three months. With the lack of inflation and the less than upbeat assessment of the global economy from the International monetary Fund earlier this week, we can likely expect similar moves form some countries in the coming months.
Asian indices are also enjoying gains; in particular the Nikkei which has risen 3.23% this morning helped by a weaker yen. Japan’s 30-year government bonds pared gains that had pushed yields to a record low, after an auction of the debt met weaker demand and showed a growing lack of investor confidence about what the price of the securities should be.
China’s GDP release on Friday still looms and is expected to be slightly lower than +6.8% y/y in Q4 but better than market expectations, thus the rosy sentiment could well continue.
In view of the recovery in the dollar, it’s no real surprise that the People’s Bank of China set the yuan fix overnight at its softest level so far this month. This ended three days of appreciation and marked the biggest drop since Jan 7th. The central bank set the daily fixing of the local currency at 6.4891 to the dollar on Thursday, the lowest level in more than two weeks. The yuan in Shanghai fell 0.07 percent in a third day of declines to 6.4818 at 11:07 a.m. local time.
Oil prices, normally the dictator of equity market direction are lower again today despite hitting 2016 highs earlier this week.
Mixed U.S. government data showed a bigger-than-expected build in crude stockpiles, rising gasoline demand, and falling oil production.
The Energy Information Administration reported U.S. crude inventories increased by 6.6 million barrels, bringing the total in storage to 536.5 million barrels in the previous week.
Oil weakness is in part due to this supply glut but caution is also abounding ahead of the Doha meeting later this week. The strong dollar is also a contributor to the current weakness. The dollar index extended Wednesday’s rebound from a nine-month low, as traders weighed chances of interest-rate increases by the Federal Reserve after retail sales and wholesale prices unexpectedly declined last month.
Today promises to be macro heavy with Eurozone and US CPI due as well as an update on where the Bank of England stands in respect of monetary policy – the short answer is nowhere – and expectations for near term tightening are certainly not at the forefront.
Comments from European Central Bank member Constancio in respect of the limited effect of negative rates and his doubts on helicopter money may not be the reasons for euro softness, but it hasn’t hurt. The single currency has for now relinquished the 80p mark against the pound and trades at 1.1263 against the dollar. Any indication that Consumer price index is weaker than slated will likely see the intraday low of 1.1234 under attack.
The FTSE, following yesterday’s surge is consolidating and being led lower by Burberry and Persimmon. Miners are also giving up some of their recent gains.
Unilever PLC (-0.35%) reported a rise in underlying sales for the first quarter as it sold more products at higher prices, but headline results were weighed down by currency volatility.
Persimmon (-3.02%) reported a strong start to 2016, with private sales rates and average selling prices continuing to rise after the strong growth it reported in 2015, but noted planning delays is "hindering the drive" to boost house volumes.
Biggest FTSE riser is Johnson Matthey (+1.4%) after Credit Suisse ups to outperform
Burberry (-6.47%) warned of a “challenging demand environment” after a tough year in which the luxury British has struggled to recover from a sales collapse in Hong Kong and Macau.
Debenhams (+3.75%) chief executive Michael Sharp submitted his resignation to the board today while announcing solid results for the UK department store chain. It reported pre-tax profit of £93.8m, in the six months to February 27, up from £88.9m in the same period last year. However, group like-for-like sales growth slowed, rising 1.1 per cent on a reported basis from the 1.3 per cent growth seen last year.
European bourses are pointing to a positive start at the open, despite a mixed finish on Wall Street from a lacklustre session. Whilst the S&P and the Nasdaq rose for a third straight session, the Dow closed 38 points lower dragged down by IBM, which tumbl…Read more
Trading in Asia was mixed overnight, despite Wall Street
Steep declines on Wall Street have been shrugged off in Asian markets overnight and European shares look set for a positive open. US shares had initially held up relatively after President Donald Trump threatened another $100bn in tariffs against China. Few we…Read more
After a rough start Wall Street staged a spectacular turnaround, its most impressive in 2 months. An apparent pulling back from the brink by the White House following China’s announcement of $50 billion worth of trade tariffs on US products eased growing conce…Read more
Markets are digesting new details on the U.S. China trade dispute. The U.S. trade representative’s office published a specific list of Chinese imports that could be hit tariffs. China’s U.S. embassy has indicated it is will respond in kind, perhaps in equal …Read more
The tech stock selloff continued overnight as Facebook remained under pressure, sending the Nasdaq a further 1% lower. A rotation out of tech stocks into safer government bonds sent US treasuries and demand for defensive stocks soaring. Whilst the S&P also…Read more
Wall Street failed to hold onto early gains, performing a spectacular reversal mid-session, dragged lower by weakness in tech stocks. US equity indices experienced some of the biggest intraday swings of the year overnight, as volatility continues to present it…Read more
Equities plummet as US & China begin a trade war Global equities plummeted in the previous session on fears that China and the US are now in a trade war. With a risk averse mood dominating, investors rushed to sell out of equities, sending indices lower ac…Read more
Dollar falls despite US rate rise; BoE in focus As the market expected, Jerome Powell delivered a 25 basis point rate hike, yet rather than sending the dollar higher we saw a distinctly dovish market response. The GBP/USD rallied to its highest level in a mont…Read more
Global Stocks Edge Higher As Amazon Offers A Distraction From Facebook
US indices closed marginally higher overnight as Wall Street bounced back from Monday’s selloff, leaving Facebook to languish on it own. Whilst the Facebook scandal shows no signs of disappe…
After politics and trade war fears drove price action for most of the previous week, Friday’s US consumer confidence hitting its highest level in 14 years, successfully brought market attention back to the economic calendar and central bank action scheduled fo…Read more
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