Financial market research and analysis

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Equities trade higher. Caution abounds
A sign of resilience and perhaps a degree of pent up tolerance to such tragic events has led to a flat to mildly positive opening in Europe this morning. While I would not say that risk is definitively back on, the fact the Vix is near its lows and USDJPY has re-established itself well above the Y112 level has helped temper any real pessimism in the equity space.

The yen has been the only winner in Tokyo against the US dollar in the complex of G10 currencies. BoJ’s policy board member Funo said the BoJ must maintain easy stance using all three tools at disposal (quantity, quality of asset buys and interest rates) and suggested more fiscal stimulus to sustain the recovery.

The FTSE is back through the 6200 level with all sectors in the green with telecommunications and IT outperforming in early trade.

Given that the long weekend is almost upon us, many will be unwilling to establish any new positions which could well lead to some downside in the coming days. The FTSE100 does not yet look overbought but upside momentum may be waning while below the 200 day moving average.

Consumer staple stocks are in demand, which tends to indicate that there is still a degree of caution abounding.

Unilever +1.18%
BAT +0.95%

The most put upon sector yesterday, the travel and leisure industry have all captured early gains.

EasyJet +0.73%
IAG +0.73%
Carnival +1.33%

Meanwhile, the precious metals producers, amongst the only gainers yesterday morning, all reside near the bottom of the index along with the rest of the mining sector as gold prices (-1.10%) shave off the gains from yesterday morning.

Fresnillo -2.6%
Randgold -1.61%

Copper prices are either poised for a break higher or a big old drop. The active contract sees copper trading at $2.29/lb and there is very little macro data that might support a move through the strong resistance around $2.30/lb. As a result, base metal producers are also under pressure this morning.

Anglo American -0.78%

The stronger dollar continues to be a theme with the dollar index now rising for 4 consecutive days hampering any real upside in commodities. The firmer greenback comes in part as a result of Philly Fed’s Harker who stated that the Fed should ‘continue to get on with rate hikes’ and he ‘would prefer more than two’ hikes this year, more than what the FOMC suggested at its latest meeting in March.

Sky Plc is one of the high risers this morning, adding 1.88% following an outperform rating from Exane BNP Paribas. The shares were down 8.9% YTD, but BNP analysts expect further expansion and think the bear case has been ‘overdone’. Sky has also taken a minority stake in Sugar Films.

Paddy Power is down 2.22% on news that COO Andy McCue is to depart the company.

21-5-2019

Nasdaq with US tech sector plummet on Huawei decision
Wall Street closed lower as the fallout from Huawei dragged down tech stocks. The Nasdaq plummeted 1.7% on Monday as the crackdown on China’s largest telecommunications and electronic equipment maker pressured the US technology sector. US chip makers tumbled a… Read more

20-5-2019

Oil jumps as OPEC signals intention to maintain cuts
Markets Mixed As Google Suspends Business with Huawei Asian markets put in a mixed performance overnight as investors paused, waiting for new developments in the US – China trade dispute. This comes after a week of escalating tensions between the two powers. … Read more

17-5-2019

Pound below $1.28 as Theresa May prepares to leave
Wall Street closed higher for a third straight session overnight as solid economic data and robust earnings from the likes of Cisco and Walmart boosted sentiment. Investors put US China trade dispute anxieties behind them and continued to jump back into equiti… Read more

16-5-2019

Trump's Visible Hand Drives Markets
The Dow and the broader US market extended the relief rally on Wednesday amid easing trade tensions. News that Trump would restart trade talks with China boosted optimism that the two powers could avoid a prolonged, economically damaging trade war. But it woul… Read more

15-5-2019

Stocks Rebound with Chinese Stimulus Hopes
Asian markets followed Wall Street higher overnight as trade war fears eased. Markets across Asia rebounded from 3 ½ month lows on a softening of stance from Trump and amid growing expectations of further stimulus from the Chinese government. Despite the advan… Read more

14-5-2019

Worst Day on Wall Street Since Jan 3
Wall Street closed deeply in the red on Monday. The Dow shed over 600 points and the S&P dumped 2.5% in the worst trading day since 3rd January. Investors rushed to take risk off the table as China raised tariffs on US imports, a retaliatory measure to the… Read more

13-5-2019

Futures Plummet As Investors Eye Trade Dispute Impasse
As we head into the new week, trade tensions will remain a key focal point for the markets and risk sentiment. In the UK specifically, Brexit and Theresa May’s ability to cling to power ahead of next week’s European elections will be an important driver of dom… Read more

10-5-2019

Yield Curve Inverts But "Beautiful Letter" Keeps Deal Hope Alive Despite Tariff Increase
Global equity markets were mixed as investors digested the latest headlines from the US – China trade talks. Asian markets pared earlier gains, European bourses are pointing to a stronger open, whilst US futures head south. The mixed response from the market r… Read more