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Shares back up as trade deadline approaches

Global event risk for the remainder of the week is a disincentive to take big risks right now. There are four trading days left for some announcement on the new US tariffs to be imposed on China. It looks like if the US President had to make the decision on new tariffs right now, he would implement them. For that to change before December 15, according to Trump, there needs to be ‘movement’ from China.

The unveiling of two articles of impeachment against Donald Trump by Democrats today only serves to amplify the political uncertainty. We are worried that the timing of impeachment means Trump will feel backed into a corner- and could feel compelled to come out fighting China with new tariffs.

With two full days until election day the FTSE 100 is trading lower for a second day running. Ashtead Group is leading the declines after half-year results. The results were good and dividends are rising but there are question marks over future strategy. All Ashtead’s growth has come from the US, so we’d like to see it double down there instead of re-focusing efforts on a lacklustre UK market.

The vulnerabilities of German exports to the US, China and the UK are exposed today and traders are shying away from companies listed on the DAX. The index has dropped below 13k as risks surrounding the tariffs and election mount. The Dax is lower (-0.4%) over the last 5-days, which compares particularly unfavourably with the S&P 500 is which is positive (0.7%).

The S&P 500 is backing off from a fresh-approach at record highs for a second day. Traders are taking a little risk off the table before the FOMC tomorrow.

EURUSD is the pair to watch with the Fed and ECB on tap this week. The euro got a little boost before German ZEW data which showed an improvement in economic Sentiment in December.

GBPUSD remains in a tight-locked range around 1.315 with Sterling bulls taking a rest before the Fed meeting and UK election.

Crude oil is flat ahead of API US inventories later but remains on a generally upward track in the wake of the OPEC decision to reduce output. Another inventories drawdown is expected and that supports the tighter supply picture sought by OPEC and its allies.

The potential for fallout from the Fed meeting has meant gold has seen little haven demand from a potentially risky week. The Fed predicting unchanged rates for the foreseeable future doesn’t do much for gold either way and explains the flat price performance over the last 5-days.

21-9-2020

Trump approves TikTok deal, Powell & Superdry earnings
MARKETS The Dow Jones fell on Friday as investors had to contend with another selloff in big tech, led by Google. Friday moves came as four major types of options contracts were set to expire in a quadruple witching, triggering a rise in volatility. European e… Read more

18-9-2020

USD/JPY sub-105 and UK retail sales
MARKETS US stocks fell in volatile trading on Thursday amid renewed pressure in shares of major tech companies. Conflicting messaging on the coronavirus vaccine front and uncertainty around further stimulus also weighed on sentiment. European equities fell aro… Read more

16-9-2020

Buffett-backed Snowflake IPO & Fed Preview
MARKETS The Dow Jones ended roughly flat on Tuesday, pressured by a fall in financials and a u-turn in Apple after the tech giant launched a new services bundle and hardware. The S&P 500 was up 0.52% while the Nasdaq added 1.21%. Apple rose 0.2% but had be… Read more

14-9-2020

Brexit bill first debate & tech stock sell-off
Markets The major U.S stock indexes fell for the second week in a row, as technology stocks experienced their worst pullback since March. The market was volatile in a holiday-shortened week, with the Nasdaq posting a 4% decline on Tuesday followed by a nearly… Read more

18-5-2020

Gold hits 7-year high after Powell Warning
Fed Chair Jay Powell has warned the US economic recovery might last through the end of 2021. The Fed is normally too optimistic in its forecasts so the outlook feels bleak. Still, warm weather is encouraging countries to continue exiting lockdown. If the flu s… Read more

14-5-2020

Powell predicts more pain to come but no NIRP
A warning from the top of the US central bank that there’s more pain to come isn’t going down well across markets. Fed Chair Jerome Powell warned yesterday that more stimulus will likely be needed in the US to fend off the economic damage done by virus and pol… Read more

13-5-2020

“Suffering and death” warning hurts markets
A sense of caution has taken hold across markets. Shares, riskier currencies and oil are pointed lower. There’s a reassessment of the likely timeline for economic reopening. Our sense is markets juiced up by higher liquidity may have gotten ahead of themselves… Read more

12-5-2020

Bitcoin halving, dollar breakout on second wave fears
Market sentiment remains fragile. There’s a lot of emphasis being placed on the virus numbers in economies that have been gradually reopening.  Wuhan, the City in China where it all began reported its first ‘cluster’ of new cases yesterday after lifting restri… Read more