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Steel Tariffs & Wall Street drops, Christine Lagarde & EURUSD holding 1.10

Shares in Europe are on course for a positive start with LCG pricing indicating a higher open on Wall Street. The dollar is up slightly after falling yesterday. Gold remains in a tight range while oil is rising for a second day.

Wall Street drops after steel tariffs announced

Shares slumped on Monday in the biggest daily fall since Wall Street struck record highs last month. The US placing steel and aluminium tariffs on Argentina and Brazil caught markets off guard. Traders have had US-China trade tunnel vision. As Americans would say, this came out of left field. The new tariffs in South America are a reminder that with Trump as US President, a phase one trade deal with China doesn’t mean global trade just resets to the old status quo. Traders are buying the dip on Tuesday but there is a risk that markets have been placing too much emphasis on the trade deal, at the expense of ignoring other risks. The growing reticence from central banks, like the RBA overnight, to expand monetary stimulus is being ignored while the trade war takes centre stage.

Euro rebounds from 1.10 level again

A broad decline in the dollar after soft manufacturing data has pushed the euro to 2-week highs. A fourth monthly decline in US manufacturing was particularly disappointing in the wake of more upbeat data in China and parts of Europe. The rally in the euro yesterday was notable from a price action standpoint. It is the third time the 1.10 price handle has held off declines in EURUSD since breaking above it in early October. It’s a further indication that the euro is bottoming out after hitting 2-year lows in September this year.

New ECB President Christine Lagarde might be some of the reason the euro strengthened more than other currencies against the dollar. Traders are reading the tea leaves scattered by Lagarde in her first speech to the European parliament. Lagarde said she would be resolute on the ECB inflation mandate, seemingly indicating no plans to reduce the target rate from just under 2% to 1%. That’s dovish because the ECB isn’t meeting the target, and arguably needs more stimulus to reach it. On the other hand, the acknowledgement of the side-effects from the ECB’s ultra-accommodative policy is a notable shift from her predecessor Mario Draghi – who always minimised the negative effect on banks specifically.

24-1-2020

Markets cheery and central bankers dreary…
EQUITIES Shares in Europe look set for a strong start to trading on Friday morning. The World Health Organisation not designating the Wuhan coronavirus an international emergency has taken the fear gauge down a few notches. The travel restrictions and cutback… Read more

23-1-2020

Risk aversion back on coronavirus & US-EU Trade. ECB up next
EQUITIES Risk aversion has taken hold across Asian markets with the sad and worrying news of more deaths due to the coronavirus in China. Official reports now indicate nearly 600 cases and Macau has cancelled Lunar New Year celebrations after a second case of… Read more

22-1-2020

DAX record high, Tesla $100B & markets brush off pandemic
EQUITIES Blowout fourth quarter earnings and subscriber growth at Netflix has refocused investors’ attention on market fundamentals. Market sentiment had been impaired by worries about the new coronavirus out of China, which has now spread to the United State… Read more

20-1-2020

Oil prices spike on Libya pipeline closure, Europe to open higher
EQUITIES European shares are set to open higher on Monday in what may be a more muted day of trading with Wall Street closed for Martin Luther King Jr. Day. Trading in Asia was light with US investors on holiday today and Chinese New Year celebrations set to b… Read more

17-1-2020

S&P 500 tops 3,300 as Alphabet reaches $1 trillion
EQUITIES European shares look set to open higher on Friday bolstered by stats showing stable economic growth in China and another record-breaking session on Wall Street that saw the S&P500 top 3,300 for the first time. Mining companies are likely to featur… Read more

16-1-2020

Europe to open higher & Sterling recovers
Shares in Europe and on Wall Street are set for a higher open on Thursday after a positive session in Asia.   Wall Street notched up new records and finished the day higher after the signing of the phase one US China trade deal. That the S&P 500 and Nasdaq… Read more

15-1-2020

Stocks, oil lower as Tariffs stay in place, Persimmon, Goldman Sachs, Saunders, UK CPI
European shares are lower on Wednesday after a down session in Asia while LCG pricing points to a lower start on Wall Street. US Treasury Secretary Steve Mnuchin confirmed that tariffs against China will remain until November, after the US election. The tariff… Read more

14-1-2020

Currency manipulator, China exports, Yuan 5-month high, US bank earnings
European shares are flat on Monday after a mixed session in Asia while LCG pricing points to a lower start on Wall Street. INDICES: US removes China currency manipulator status Wall Street has yet again reached new record highs in the lead-up to the signing… Read more