Financial market research and analysis

The two-day Federal Reserve meeting starts today. The market gives no probability for an interest rate hike at this week’s meeting. The US dollar is mixed across the board.

Money continues flowing into the yen, while the sterling remains under pressure as more Brexit-favourable news hit the wires.

Brexit talks still dominate headlines, and there is little enthusiasm to buy UK stocks before the referendum. The sentiment is sour after Britain’s biggest selling newspaper ‘Sun’ backed the ‘Leave’ camp.

Anxiety surrounding the referendum has increased the volatility in global bond markets. German yields hit a record low, the German yield curve is currently negative up to a nine year maturity; the Japanese 10-years yield retreated to -0.17%.

Gold is slightly off four-week highs. The precious metal remains bid as physical gold demand climbed to the highest levels since 2013. The limited risk appetite and globally weakening sovereign yields could encourage a further attempt toward the $1300 mark, should the US dollar remain soft before and after the Fed decision.

The FTSE extended losses to 6002p at the time of writing. Given the oversold conditions, a short-term bounce off the 6000p could be healthy before a potential slide below this level. From a technical perspective, the FTSE stepped in the mid-term bearish consolidation zone below the 6072p level, the major 38.2% retracement on February – April rise. Clearing the 6000 support could pave the way toward the 100-month moving average, 5840p.

Miners and oil companies are among the leading losers in London. BP (-0.64%) and Royal Dutch Shell (-0.93%) trade south as the probability of a price recovery back to the $50/barrel is fading away along with each dollar lost on a barrel.

UK financials (-0.62%) are further squeezed on rising Brexit risks and record low sovereign bond yields.