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Shares bounce after WHO, Amazon back to 1tril, BOE bottled it

Amazon should be worth over $1 trillion again today after its well-received Q4 earnings.

The WHO recommendation that travel continues is great news for oil prices

Brexit day can be a watershed moment for the FTSE

EQUITIES

The World Health Organisation designating the coronavirus a global public health emergency turned out to be a positive because of the simultaneous recommendation not to restrict travel. It was the barrage of airlines cancelling flights and the resulting slowdown in economic activity that would bring which had really spooked markets.

Blowout earnings from Amazon should see the shares hit new record highs today and the company’s big weighting on the Nasdaq could see the index reach new highs too. Wall Street closing near session highs after big declines is a positive sign for European shares today. If a recovery does take hold, we’d expect it to be weaker in Asian markets where the coronavirus is centred.

Amazon confounded the sceptics with a shock 7% rise in earnings to $6.47 per share when expectations were for a heavy drop to $4.05. Amazon Web Services remains the centre of profitability while the core retail business consumes almost all the costs. AWS did see a decline in revenue growth but at 34% investors weren’t complaining.

The FTSE 100 has taken a royal beating because of its heavy weighting of oil and mining companies that depend on China for demand growth. The UK index was down -1.36% yesterday. ‘Brexit Day’ is not a catalyst for buying British shares in of itself. But put together with the overall scenario we think it could be watershed moment. Brexit is officially done, UK markets are at attractive valuations and the recent sell-off gives a lower entry point.

FOREX

After weeks of unreliable boyfriend references, we are kicking ourselves for being taken in again! The Bank of England of course didn’t cut interest rates and maintained its guidance towards hiking rates. The guidance was softened, and growth forecasts were lower but that was largely about the disparity between the sluggish hard data and the uptick in business surveys since the election. We are glass-half full on the UK economy and expect the hard data will improve to catchup with the business surveys. That to us means no rate cuts in 2020 saving some wider global disaster.

With the benefit of hindsight, the decision to hold was very straightforward for the Bank of England. Britain is about to leave the European Union and Chancellor Sajid Javid will most likely offer up a high-spending budget next month. So circumstances are changing, and it is better the BOE holds off making a decision until all the information is at hand.

COMMODITIES

Oil bounced back yesterday after taking a drubbing that took prices back to the lows reached in October. Brent crude oil bounced back above $59 yesterday and we are eyeing a move over the key $60 threshold on Friday.

Gold prices failed at $1585 per oz and closed down and near lows of the day. Gold will be the punching bag in any risk-recovery but for its outlook we just need to monitor the extent of the declines.

21-2-2020

Dollar index headed for 100, Korea’s KOPSI at sharp end
The sudden shoot up in the number of coronavirus outside of China has seen sentiment sour again across markets. The Japanese yen, Korea’s KOPSI are under fire, automaker shares might be next, and the dollar and gold are the places of choice to take cover. Aut… Read more

18-2-2020

Shares fall, gold pops after Apple & HSBC coronavirus warnings
INDICES Stocks in Europe look set for a weaker start after a fall in Asia while US futures point to a lower open on Wall Street. It’s a reaction to major companies warning the coronavirus outbreak will eat into the current quarter’s earnings. Heavy losses and… Read more

17-2-2020

Another China rate cut & Japan nearing recession
Wall Street is closed today for Presidents Day so that should mean thinner trading in general. The number of new coronavirus cases has gone up in China but new stimulus measures from the Chinese central bank is putting investors at ease. The PBOC has cut ‘med… Read more

13-2-2020

Euro hits 2 ½ year low, Coronavirus infections spike
China authorities have been under-stating reported cases of the coronavirus. A new methodology of diagnosis is apparently behind a sudden spike in the cases and deaths resulting from the coronavirus on Thursday. The top Communist party official in Hubei Provin… Read more

12-2-2020

Stocks rise, dollar slips after Powell leaves door ajar
EQUITIES Asian equities are pushing higher overnight. China reporting the lowest number of new cases of the coronavirus since January keeps the prospect of a pandemic at bay. China’s CSI 300 is flat today but has risen the prior six days in a row and is up 8%… Read more

11-2-2020

Central bankers expected to underpin stocks while LNG dives as Coronavirus claims 1000 lives
There have now been more than 1000 deaths from the coronavirus with 42,700 cases. That makes a mortality rate at 1% according to Imperial College London. Tesla and Ford are returning to production in China but others including GM are still closed until next we… Read more

10-2-2020

Equities pullback, PBOC lending & higher inflation help CNH
The rate of new virus cases is slowing, and investors stepped heavily back into risky assets last week. A little caution was on display come Friday which is running through to Monday. Workers at the Foxconn factory in Zhengzhou getting the go-ahead to return… Read more

7-2-2020

Europe joins the rally plus unicorn earnings & NFP
EQUITIESGlobal stock markets have been blessed with four straight days of gains this week. Whether we can get five-for-five will probably rest with the monthly US jobs figures later. On Thursday, the Dow Jones and S&P 500 rose 0.3% to hit record highs. It… Read more