Financial market research and analysis

A sign of resilience and perhaps a degree of pent up tolerance to such tragic events has led to a flat to mildly positive opening in Europe this morning. While I would not say that risk is definitively back on, the fact the Vix is near its lows and USDJPY has re-established itself well above the Y112 level has helped temper any real pessimism in the equity space.

The yen has been the only winner in Tokyo against the US dollar in the complex of G10 currencies. BoJ’s policy board member Funo said the BoJ must maintain easy stance using all three tools at disposal (quantity, quality of asset buys and interest rates) and suggested more fiscal stimulus to sustain the recovery.

The FTSE is back through the 6200 level with all sectors in the green with telecommunications and IT outperforming in early trade.

Given that the long weekend is almost upon us, many will be unwilling to establish any new positions which could well lead to some downside in the coming days. The FTSE100 does not yet look overbought but upside momentum may be waning while below the 200 day moving average.

Consumer staple stocks are in demand, which tends to indicate that there is still a degree of caution abounding.

Unilever +1.18%
BAT +0.95%

The most put upon sector yesterday, the travel and leisure industry have all captured early gains.

EasyJet +0.73%
IAG +0.73%
Carnival +1.33%

Meanwhile, the precious metals producers, amongst the only gainers yesterday morning, all reside near the bottom of the index along with the rest of the mining sector as gold prices (-1.10%) shave off the gains from yesterday morning.

Fresnillo -2.6%
Randgold -1.61%

Copper prices are either poised for a break higher or a big old drop. The active contract sees copper trading at $2.29/lb and there is very little macro data that might support a move through the strong resistance around $2.30/lb. As a result, base metal producers are also under pressure this morning.

Anglo American -0.78%

The stronger dollar continues to be a theme with the dollar index now rising for 4 consecutive days hampering any real upside in commodities. The firmer greenback comes in part as a result of Philly Fed’s Harker who stated that the Fed should ‘continue to get on with rate hikes’ and he ‘would prefer more than two’ hikes this year, more than what the FOMC suggested at its latest meeting in March.

Sky Plc is one of the high risers this morning, adding 1.88% following an outperform rating from Exane BNP Paribas. The shares were down 8.9% YTD, but BNP analysts expect further expansion and think the bear case has been ‘overdone’. Sky has also taken a minority stake in Sugar Films.

Paddy Power is down 2.22% on news that COO Andy McCue is to depart the company.