Financial market research and analysis

Trading in June has started with a positive tone. Softness in commodities after a gauge of Chinese manufacturing fell into contraction was outweighed by more positivity about the political outlook. European banking shares were lower after the European Commission agreed to allow Italy to inject capital into Monte dei Paschi, again. Suggestions that President Trump may pull the US of the Paris climate accord didn’t seem to faze investors too much.

FTSE 100 tops 7550

The FTSE 100 started June in the same kind of positive form that made May the strongest month this year. It’s a one-week countdown to the general election and sentiment in the market seems pretty healthy. Micro Focus International was a top blue chip riser after reporting a healthy set of results. Lloyds shares dropped as the bank it completed its acquisition of MBNA credit cards as expected. A third monthly slowdown in house prices according to Nationwide saw homebuilding shares drop, notably Taylor Wimpey which spent the day bottom of Britain’s equity benchmark.

US opens higher

Encouraged by strong unemployment data, US investors sent stocks on Wall Street higher on the open. Private payrolls don’t always tally well with the non-farms data from the BLS but it’s another bit of evidence that the US is pulling out of the economic weakness that dogged the first quarter. Shares of packaged food companies Conagra Brands and Pinnacle Foods were top risers on talk of a possible merger. The potential for lighter-touch environmental regulations meant industrial companies like GE and Caterpillar were top risers on the Dow Jones.  

Sterling in polls-land

With the election one week away, currency traders were placing more emphasis on the latest polls than economic data. Data from Markit on Thursday showed a 10^TH, albeit slower monthly rise in UK manufacturing activity. The latest poll from YouGov puts the Conservatives at a 3-point lead over Labour, which would leave Theresa May nine seats short of a majority. Markets are caught between a temptation to panic at the tightening polls and the knowledge that polls have gotten it pretty wrong recently.

Metals drop after China data

Gold and silver prices fell on Thursday after the Chain Caixin manufacturing PMI for May fell below the 50 mark designating contraction. Silver is looking toppy after having only recovered half of what was lost when the price fell almost every day for a month in late April and early May. The data was particularly disappointing after government data had improved slightly the day prior. It’s evidence that China’s state-owned enterprises, typically the biggest recipients of government stimulus are doing the heavy lifting while private industry fails to keep up.

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