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Global Growth Woes Pull Asian Stocks Lower & Pound Ignores Brexit Extension

Wall Street gained and Asian markets slipped following cautious words from central banks. A dovish ECB, milder US core inflation and a growing number of Fed policymakers who now see policy moving in either direction have investors increasingly convinced that interest rate rises will be kept on hold.

On the one hand, global central banks sitting tight keeping a patient wait and see approach is a positive backdrop for stocks. However, on the other hand the global growth slowdown story is a complication and is weighing on sentiment. Both the ECB and the Fed identified slowing global growth as important risk factors. The central bank observations come following the third downgrade in global growth by the IMF in just six months.

The dollar held near two-week lows as Fed minutes reinforced a patient approach to raising interest rates. Meanwhile the pound held its recent range as Brussels extended the Brexit deadline.

Pound steady as no deal Brexit avoided

The pound is starting to look rather numb to all the Brexit drama. That is the conclusion to last night’s episode. Despite Theresa May’s request for an extension until 30th June, the EU agreed to extend Article 50 until 31st October. A break clause has been included to keep hard-line Macron appeased. The pound hardly flinched, against the euro or the dollar.

Many see the writing on the wall for Theresa May. With a 6-month extension the UK will be taking part in EU elections, 3 years after the British people voted to leave the EU. A fact that many will find difficult to swallow, making those elections toxic for Theresa May. 6 months is sufficient time to oust May and replace her with a new leader and fresh blood.

Whilst the pound has shrugged off last nights development's, the prospect of another 6 months of uncertainty is certainly going to take its toll on the UK economy, which is as good as at a standstill anyway. The resilience that we are seeing in the pound as a no deal Brexit is avoided (again) may not last for long. Whilst we expect the floor at $1.30 to hold for the time being, movements in Westminster to remove May could see that swiftly broken.

Crude eases on soaring US stockpiles

Oil eased back off 5-month highs in early trade on Thursday as US crude stockpiles hit a 17 month high. US crude inventories jumped 7 million barrels to 456.6 million in the last week. This is the highest level since September 2017 according to the EIA. With US crude production at 12.2 million barrels per day, the US is the world’s biggest oil producer, ahead of Russia and Saudi Arabia.

Despite strong growth in the US oil production, supply is tightening elsewhere. Continuing OPEC productions cuts, escalating conflict in oil producing Libya, plus sanctions on Iran and Venezuela is keeping the price of oil supported. Whilst US output rises to record levels; Venezuela’s political crisis has seen output there sink to a new long term low.

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24-5-2019

Nikkei on for 3rd week of losses as oil crashes
After heavy falls on Wall Street overnight, Asian markets pared earlier losses, but were still on track for a third week of declines as investors remain focused on the US – China trade dispute. European and US futures are pointing to a positive start after the… Read more

23-5-2019

Euro dips as European elections kick off
Fears that the trade dispute will morph into a prolonged trade war sent Asian stocks lower overnight. European and US futures are pointing to another day of losses. The steps being taken by each of the powers, but principally the US are not actions of those i… Read more

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