Financial Market Research and Analysis

Our analysts have their fingers on the pulse of the world's financial market news.

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FTSE rides on the back of a bull

The FTSE opened 1.13% higher as all sectors, except utilities (-0.77%), started the weekly race in green.

 

Banks, construction, healthcare and mining stocks continue their journey north on the back of the surprise Trump-win.

 

HSBC (+1.23%) and Barclays’ (+2.92%) remain bid, on the back of a spectacular weekly rise in US and global bond yields. The US 30-year yields hit 3% for the first time since January, leading banks to see the end of the tunnel, as higher yields finally suggest a period of relief for the financial services sector that has seen its revenues heavily squeezed by the low-to-negative yield environment over the past years.

 

Rio Tinto (+2.48%) and Glencore (+2.31%) lead gains, despite a downgrade at Bank of America Merrill Lynch, after the recent stock rally pushed the sector into overbought territory.

 

Fresnillo (-1.60%) and Randgold Resources (-2.02%) continue bleeding, as gold slides to $1212. High US and global bond yields keep investors focused on interest rate instruments, rather than the yellow metal. 

 

Shire (+1.51%), AstraZeneca (+1.92%) and GlaxoSmithKline (+0.91%) stretched higher on prospects of larger revenue streams from the US market, after the Trump win threatened Obamacare and the price accessibility of many drugs.

 

Taylor Wimpey (+2.75%) released a positive outlook as trading during the second half of 2016 and into the Autumn selling season has been strong according to the company’s chief executive, ‘with good levels of customer confidence and demand underpinned by a wide range of mortgage products.’ The low rate environment has certainly tempered the Brexit shock; nonetheless, risks to the historical low rate environment could pick up along with rising inflationary pressures, and a more hawkish Bank of England policy stance. The majority of investors remain buyers (58.82%), 35.29% stay on hold with a twelve month target price set to 183.73p; 5.88% prefer to sell.

The US dollar opened the week firmer against all of its G10 peers. The dollar’s rally against the yen sent the Nikkei (+1.71%) to nine-month highs.

 

Chinese industrial production and fixed asset investments came roughly in line with expectations, while retail sales unexpectedly fell to 10% in October. We have seen a mixed reaction in Chinese equity markets; Hang Seng lost 1.37%, while Shanghai’s Composite gained 0.45% and stepped above the 3200 handle for the first time since the Dec’15-Jan’16 rout.

 

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