Financial market research and analysis

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

CFD trading is high risk and may not be suitable for everyone.
A holding pattern before big week

MARKET WRAP: A holding pattern before big week

Indices

Friday’s blowout US jobs report kept Asian stock market sentiment upbeat at the start of the new week.  In Europe, indices are down as investors strap in for what promises to be a busy week. There are two big central bank meetings, the US-China tariff deadline and the UK election. Our feeling is that these will all pass with favourable, or at least manageable results for markets. However, with major averages at 52-week highs after a strong year and with 4 big events that could unexpectedly turn sour, the risk : reward for traders favours the downside.

The FTSE 100 is being restrained by losses in oil and mining sectors after a fourth monthly decline in Chinese exports highlighted the fallout from the trade war.

The DAX is nursing small loses but is outperforming other indices in the region thanks in part to data showing an unexpected rise in German exports for October.

The S&P 500 looks set to open slightly lower but within 1% of all-time highs after the strong NFP-led gains on Friday. There’s little in the way of US data until the Fed makes its interest rate decision and sets out its economic projections on Wednesday. That probably means – you guessed it – comments on the trade war as the major catalysts. The clock is ticking in the last week before new US tariffs begin on December 15.

Forex

EURUSD The euro is off the 4-day low seen after the surprisingly strong US jobs report. Still, as strong as the November jobs report was, our feeling is it doesn’t move the dial for the Fed this week. It is the first press conference for new ECB president Christine Lagarde on Thursday. A market-moving slipup seems unlikely since she is well experienced from similar events at the IMF.

GBPUSD The pound is at its highs of the day (HOD) after weekend polls mostly showed a widening lead for the Conservatives with three days to go until the UK election. EURGBP is making fresh two-year lows. A poll from BMG has the Conservative Party with 9 point lead over Labour, up from 6 a week ago. Survation showed the lead widening to 14 points from 9 a week ago, while polling from Savanta ComRes saw the lead narrow to 8 points from 10 a week ago. There are some discrepancies about the size of the lead but the latest polls all point to a Sterling-friendly Conservative majority.

Commodities

Crude oil is a little softer at the start of the week, trading in line with general market sentiment. For WTI to be above $60 at the end of the week, we’ll need at the very least, an extension to the US tariffs deadline. In the context of typical oil market volatility, we thought the post-OPEC gains were rather constrained. That would suggest if we can get through December 15 without more US tariffs on China, there is still some pent up speculative demand for oil.

Gold fell back from $1480 per oz and its 50-day moving average after US jobs report sent the dollar flying on Friday. The best result for gold this week would be a dovish Fed hinting at rate cuts after its pause and Trump throwing a 2019 phase one trade deal out the window with more tariffs. However, consensus is that the opposite happens- and that threaten a break below $1450 support.

27-1-2020

Shares smashed, Gold jumps as coronavirus spread intensifies
According to Chinese health officials there are 2,744 coronavirus cases and 80 deaths- and it has been confirmed the virus can spread before symptoms become visible. EQUITIES European stocks are headed for a sharply lower open on Monday. Fears are growing at… Read more

24-1-2020

Markets cheery and central bankers dreary…
EQUITIES Shares in Europe look set for a strong start to trading on Friday morning. The World Health Organisation not designating the Wuhan coronavirus an international emergency has taken the fear gauge down a few notches. The travel restrictions and cutback… Read more

23-1-2020

Risk aversion back on coronavirus & US-EU Trade. ECB up next
EQUITIES Risk aversion has taken hold across Asian markets with the sad and worrying news of more deaths due to the coronavirus in China. Official reports now indicate nearly 600 cases and Macau has cancelled Lunar New Year celebrations after a second case of… Read more

22-1-2020

DAX record high, Tesla $100B & markets brush off pandemic
EQUITIES Blowout fourth quarter earnings and subscriber growth at Netflix has refocused investors’ attention on market fundamentals. Market sentiment had been impaired by worries about the new coronavirus out of China, which has now spread to the United State… Read more

20-1-2020

Oil prices spike on Libya pipeline closure, Europe to open higher
EQUITIES European shares are set to open higher on Monday in what may be a more muted day of trading with Wall Street closed for Martin Luther King Jr. Day. Trading in Asia was light with US investors on holiday today and Chinese New Year celebrations set to b… Read more

17-1-2020

S&P 500 tops 3,300 as Alphabet reaches $1 trillion
EQUITIES European shares look set to open higher on Friday bolstered by stats showing stable economic growth in China and another record-breaking session on Wall Street that saw the S&P500 top 3,300 for the first time. Mining companies are likely to featur… Read more

16-1-2020

Europe to open higher & Sterling recovers
Shares in Europe and on Wall Street are set for a higher open on Thursday after a positive session in Asia.   Wall Street notched up new records and finished the day higher after the signing of the phase one US China trade deal. That the S&P 500 and Nasdaq… Read more

15-1-2020

Stocks, oil lower as Tariffs stay in place, Persimmon, Goldman Sachs, Saunders, UK CPI
European shares are lower on Wednesday after a down session in Asia while LCG pricing points to a lower start on Wall Street. US Treasury Secretary Steve Mnuchin confirmed that tariffs against China will remain until November, after the US election. The tariff… Read more