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FTSE treads water as UK miners smirk

FTSE trades rangebound as UK miners fear a renewed slide in commodity prices. Copper and iron ore are slightly better bid today; yet there is little evidence that this week’s downside push has come to a point of exhaustion.

Anglo American announced it lowered its copper, iron ore and diamond production in Q3; diamond production fell by 27% significantly more than anticipated. Considering that the diamond business has been the major source of revenue in the first half of 2015, allowing the company to generate a decent 16% of margin on its revenues in an environment of tumbling commodity prices, the cut in diamond production could weigh on AAL’s earnings in the second half. The earning per share estimate declined 6.70% over the past four weeks, the net income has been revised down by 1.16% to $1.144bn in 2015.

Anglo shares lost 3.50% at the LSE open and currently trades below 600p. Elsewhere, Pearson extended losses after being cut to ‘neutral’ by JPMorgan.

Chinese President Xi’s visit in the UK has already led to a nuclear deal with the creation of an estimated 4000 jobs. We have seen limited reaction from the market so far. Increasing the nuclear activity in the UK will certainly trigger a reaction on the political end, therefore the conviction is not entirely there.

In the FX market, the pound is still struggling to fight back 1.55 offers against the US dollar. The 1.55-barrier to a further appreciation is presently keeping the FTSE in the positive consolidation zone; technically this is above 6225/33 area (Fib 38.2% on Sep 29 – Oct 9 rise).


It is certainly too early for the ECB to act

The European Central Bank meets today. The consensus is the status quo in the ECB’s monetary policy even though we hear rising voices in favour of deeper negative deposit rates and the possibility of an extension in the Quantitative Easing program.

We do not rule out a possibility of looser ECB policy before the end of the year yet we believe that today is not the day. The ECB is more likely to sit back and watch the macro data before speeding up its asset purchases. Simply because the inflation expectations seem to have improved through the month of October.

In fact, the 5y5y euro inflation swaps rebounded to 1.70% after bottoming at 1.56% end of September.

Euro traders remain on the sidelines heading into the ECB decision. The euro failed to clear the 1.15-resistance against the US dollar last week on possibility of additional stimulus from the ECB.

Either way, President Draghi is expected to talk down the euro. The euro risk is two-sided. If ECB fails to satisfy the EUR doves, we may well see a bounce back to 1.15 level and above. While a satiating dovishness from the ECB could reinforce the euro depreciation against the USD. The 1.1360 level (Fib 38.2% retrace on Oct rise) should distinguish between a fresh bounce to 1.15+ and a deeper downside correction. Key supports are eyed at 1.1270 (Fib 38.2% retrace on Dec’14 – Mar’15 decline) then 1.1180/27 (area including the 100 and 200-dma).

The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 71% of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.

14-12-2020

GBP jumps on Brexit talks extension
The British pound has jumped in early trading this week after the UK Prime Minister and EU Commission President agreed to extend Brexit talks beyond Sunday. MARKETSThe S&P 500 fell on Friday, wrapping up a losing week, as the outlook for additional fiscal… Read more

10-12-2020

AirBnB IPO today
At its IPO price of $6 per share, Airbnb ABNB, is expected to raise at least $3.5 billion with an initial market capitalization topping $40 billion. MARKETSStocks fell on Wednesday, retreating from the record highs set earlier in the day, as tech shares strug… Read more

9-12-2020

S&P 500 closes over 3,700
MARKETSThe S&P 500 closed above 3,700 for the first time ever on Tuesday as Pfizer started to roll out its coronavirus vaccine in the U.K., lifting hope of the economy recovering in the near future. The Dow Jones gained 0.4% while the Nasdaq Composite clim… Read more

8-12-2020

Global stock market cap reaches $100 trillion for 1st time
The value of all the stocks in the world put together has reached a giant $100 trillion for the first time. MARKETSThe Dow fell 0.69% Monday, led by Intel and broad-based weakness in value stocks as rising Covid-19 restrictions offset optimism over an imminen… Read more

4-12-2020

Pfizer vaccine supply chain problems
MARKETS The S&P 500 fell slightly from record high. Major U.S stocks indices cut gains quickly in the final hour of trading after Dow Jones reported Pfizer now expects to ship half of the doses it had previously planned this year after finding raw materia… Read more

2-12-2020

Dollar Purge Continues
The US dollar dropped to fresh two-and-a-half year lows on Tuesday, with EUR/USD rising above the widely-watched 1.20 handle. MARKETSNews• Stocks in Asia-Pacific were mixed in Wednesday morning trade after major indexes on Wall Street surged to record highs o… Read more

1-12-2020

Bitcoin hits record high
The price of Bitcoin climbed 8.7% on Monday to reach a fresh record high of $19,857.03 - overtaking its previous peak made in 2017. MARKETSNews• Asia stocks rise as the Caixin/Markit manufacturing Purchasing Managers’ Index for November came in at 54.9 — its… Read more

30-11-2020

OPEC meeting starts
Today OPEC+ begin a 2-day meeting to decide whether to begin producing an extra 2 million barrels per day of oil, or delay for another 3-6 months. MARKETSNews• Asia-Pacific markets are mixed this morning while S&P 500 futures are down half a per cent. Ind… Read more