Yellen’s testimony yesterday to the Senate Committee was more of the same. She reiterated that USD strength was a signal of economic strength and that weak oil had mostly been negative but would eventually be good for the economy. The main takeaway was that negative rates once again came up, the Fed chair is still evaluating both the necessity and the potential outcome of such a policy. As a result, US treasury yields fell and the market now basically pricing out any chance of a move by the Fed in 2016. If anything, despite Yellen’s denials that the Fed has and continues to misread the effect of USD strength on the rest of the world, the sovereign debt market is pricing in a rate cut, albeit a very small possibility. Nevertheless, the tables appear to be have turned and the ‘one and done’ scenario seems to be true now.
Asian trade overnight offered more of the same with the Nikkei continuing its downward path, down 4.8% and USDJPY holding above 112.00 but with a bias for additional downside having rallied from 111.0 to a flash high of 113.00 yesterday on speculation that the BoJ had been intervening. The bank itself made no comment either way but it will likely keep the pair in a consolidative pattern as FX markets will be mindful of the potential threat.
German quarterly GDP came in as expected at 0.3%, Italy on the hand, failed to meet expectations, only managing to grow 0.1% in the last quarter against the consensus for a gain of 0.3%. All of this tends to imply that the composite number for the Eurozone will be weak, likely growing a mere 0.3% in Q4. The flash number is released at 10am.
We have a plethora of additional macro activity today including Eurozone GDP and US retail sales, all of which will likely add to the volatility and confusion seen in recent weeks. Consensus is now for even more QE from the ECB in March and expectations are for a deposit rate cut to 0.4% and this will likely be reinforced by the weaker numbers coming from peripheral member states. This, for now, has done little to halt the stride of the euro which looks set to head higher against both the pound and the dollar is the risk off climate holds.
The FTSE is up 1.8% despite the heavy selling pressure in the US and Asia, we’ve seen this before and the lack of conviction in the move will likely manifest itself soon. You could say that the moves over recent days have been overdone but the FTSE has yet to register oversold form a technical standpoint and is still, despite dipping yesterday, holding above the 5600 level. It is being helped by some bargain hunting in the commodities space after positive reports for a change in oil supplies from members of OPEC.
Banks are also seeing gains as European financials make an effort to rally. Anglo American (+7%) and Standard Chartered (+6%) are the leaders in each of these sectors in the UK in early trade.
Gold, having broken a significant technical level yesterday, soaring over 5% has pulled back off the highs, so for a change, the gold producers are underperforming with Randgold (-0.16%) and Fresnillo (1.43%) taking a breather after yesterday’s moves and lacking the upside of the base metal producers this morning.
Rolls-Royce (+14%) has slashed its dividend for the first time in 24 years, cutting it to 16.4 pence. They keep their 2016 full year outlook unchanged despite a 12% fall in 2015 pre-tax profits. This morning the CFO has said there is no need for any rights issue, and the decisive action seems to have impressed investors who have been suffering thanks to frequent profit warnings over the last year.
GlaxoSmithKline (+0.5%) The UK's competition watchdog has fined pharma companies including GSK a total of £45m for conspiring to delay the entry of a generic drug between 2001 and 2004.
Commerzbank (+12%) a first dividend since 2007 has been announced, as fourth quarter profits came in better than expected. Having seen heavy selling this week, this will be some comfort to a number of European financials today.
Segro (+1.5%) the company notes recent media comment regarding a possible transaction with Roxhill Developments and confirms that it is in discussions regarding a possible arrangement that will enable them to strengthen their presence in the UK big box logistics market.
Supergroup (-8%) the stock is lower following a placing of shares by one of the founders, reportedly because of a divorce settlement.
We call the Dow Jones higher by 131 points to 15791.
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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
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