Incisive market commentary from David Morrison

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Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
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Tory Poll Lead Narrows Sharply - Video Update
31 May 2017
S&P 500 and NASDAQ break winning streak
31 May 2017
Sterling swings on polls - PM Bulletin
30 May 2017
Equities drift after long holiday weekend - AM Briefing
30 May 2017
Crude oil slumps on OPEC disappointment - AM Briefing
26 May 2017
OPEC disappoints while FOMC minutes provide cheer - Video Update
25 May 2017
OPEC expected to agree 9-month extension - AM Briefing
25 May 2017
Look-ahead to OPEC - Video Update
24 May 2017
Markets quiet ahead of FOMC minutes and OPEC - AM Briefing
24 May 2017
Crude oil update - OPEC meeting in focus - PM Bulletin
23 May 2017
Markets shrug off atrocity in Manchester - AM Briefing
23 May 2017
Equities mixed, but supported by oil
22 May 2017
Nerves steady after firmer close on Wall Street - AM Briefing
19 May 2017
Political fall-out continues to weigh on markets - Video Update
18 May 2017
Slide in European indices accelerates - AM Bulletin
18 May 2017
Trump’s woes hit markets - Video Update
17 May 2017
Trump’s woes lead to market wobble - AM Briefing
17 May 2017
EURUSD hits six-month high - PM Bulletin
16 May 2017
Crude oil extends rally - AM Briefing
16 May 2017
US inflation data and retail sales in focus - AM Briefing
12 May 2017
Crude oil recovers after “flash crash”- Video Update
11 May 2017
Crude oil soars while equities drift - AM Briefing
11 May 2017
Are investors too complacent? - Video Update
10 May 2017
Investors rattled after Trump fires FBI head - AM bulletin
10 May 2017
Crude oil’s “flash crash” leads to OPEC desperation - PM Bulletin
09 May 2017
Equities rally as oil steadies - AM Briefing
09 May 2017
Forex: Top Ten Tips for beginners - Trading Guides
08 May 2017
Markets little moved after Macron win - AM Briefing
08 May 2017
Payrolls in focus - AM Briefing
05 May 2017
NFP look-ahead - Video Update
04 May 2017
FOMC hints at rate hike in June - AM Briefing
04 May 2017
FOMC look-ahead - Video Update
03 May 2017
Apple disappoints on sales numbers - AM Briefing
03 May 2017
CFD Trading Tips - Trading Guides
02 May 2017
European traders return after May Day - AM Briefing
02 May 2017
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Early moves

·         Mixed open for European indices

·         Trump continues foreign tour

It’s turning out to be a mixed start to the week as early gains across European indices have largely evaporated. At the time of writing only the UK’s FTSE100 is trading in positive territory. However, losses are modest so far as investors have taken some comfort from Friday’s rally across Wall Street. On top of that, crude oil continues to push higher ahead of Thursday’s OPEC meeting and this is helping to support energy stocks.

Investors are also relieved that the immediate pressures on President Trump are taking a back seat for now. The appointment of ex-FBI chief Robert Mueller as special counsel to investigate alleged ties between Russia and Trump's election campaign team has helped to cool tensions. On top of this, it’s felt that the president struck the right tone when he spoke in Saudi Arabia over the weekend. Mr Trump is now off to Jerusalem where he’s set to meet Palestinian and Israeli leaders.

Stock Index Update

·         Global indices bounce back

·         Trump concerns diminish

European and US stock indices stormed higher on Friday to make back around half of the losses realised by Wednesday’s sudden plunge. European markets largely followed the US, which was to be expected as it’s been Washington politics which caused last week’s disruption. However, it’s also fair to say that investors are increasingly calculating where the best value is out there. A number of fund managers are saying that the US equity market is looking expensive in comparison to European and Asian Pacific stocks.

Mid-week saw the Dow and the S&P500 register their biggest daily drops since last September. The sell-off also saw the NASDAQ post its biggest decline since last summer, pulling back from hitting a record closing high the night before. The slump followed allegations from sacked FBI head James Comey who claimed that President Trump sought to interfere with the FBI’s investigation into Michael Flynn, Trump’s original pick as National Security Advisor. However, suggestions that the president faced impeachment seemed wide of the mark. On top of this, markets stabilised soon after it was announced that another former FBI Director Robert Mueller had been appointed special counsel to investigate alleged ties between Russia and Trump's election campaign team.

Investors had been concerned that Trump’s woes were bound to hold up all his plans for infrastructure spending, tax cuts and regulatory roll-back. However, it could be that his current difficulties galvanise Republicans in Congress to speed up the legislative process, and actually achieve something before mid-term elections next year.

Commodities Update

·         Oil rallies ahead of this week’s OPEC meeting

·         Gold and silver recover

Crude oil put in a storming performance on Friday and ended up posting its best week in around two months. WTI pushed back above $50 per barrel while Brent settled comfortably above $53. Both contracts closed out at their highest levels since mid-April. The current rally began earlier this month after both contracts fell to their lowest levels since last November. This was just before OPEC and a number of non-OPEC producers agreed to cut output by close to 1.8 million barrels per day. Crude sold off as global inventories remain near all-time records as US shale oil production rose to cover the daily output cut. Also, there was increased evidence of a slowdown in global demand growth. But despite all these negative factors crude has managed to push higher ahead of this Thursday’s OPEC meeting. Recent chatter suggests that Saudi Arabia and Russia are leading a push to extend the output cut beyond its current June end date to March next year. If so, that should help run down existing stockpiles. However, some analysts believe it will simply give US producers more reason to expand the rig count and boost shale output.

Precious metals ended the week in fine form as both gold and silver made back a decent proportion of their losses from Thursday. Friday’s rally saw gold push back above $1,250 putting it on course for its best week in over a month. It was a similar story for silver. Both precious metals got a lift from the sell-off in the US dollar, short-covering and an increased demand for safe havens from investors rattled by events playing out in Washington. Investors were rattled by stories of the Trump administration’s dealings with Russia in the lead-up to and immediately following the US presidential election. This hit a new level of seriousness after Ex-FBI Director James Comey alleged that President Trump attempted to intimidate him into calling off an investigation into Michael Flynn. Mr Flynn was Trump’s original pick as National Security advisor but was forced to resign as it became apparent he had failed to disclose full details over his contacts with Russian officials. But investors seemed to relax and precious metals slipped a touch after ex-FBI head Robert Mueller was appointed as special counsel to investigate the Trump administration’s Russian dealings.

Forex Update

·         Dollar continues to slide

·         Sterling recovers from “flash crash”

By the end of last week the dollar (as measured against the basket of currencies in the Dollar Index) was trading back at lows last seen at the time of the US presidential election in early November. The Dollar Index has come under constant selling pressure since hitting a fourteen year high at the beginning of this year. Last week’s pull-back was largely the result of Trump’s problems as he struggles to deal with a string of allegations concerning his dealings with Russian officials and what he may, or may not have said to the former head of the FBI, James Comey. Not only is Trump’s ability to drive through his promised tax cuts, spending and regulatory reform plans in doubt, but there’s also a feeling that the Fed will row back from expected rate hikes this year. On Friday FOMC-voting Fed member James Bullard said that the US central bank should retain the option to do more quantitative easing if required in the future. His comments led to further dollar losses and sharp gains for other currency majors. The euro is also in favour amongst investors who believe the ECB is getting closer to starting to wind down its monthly bond purchase programme. Meanwhile, sterling recovered from a brief “flash crash” on Thursday night and traded back above 1.3000 against the dollar.  

Upcoming events

Today’s significant events and economic data releases include Eurogroup meetings the the German Bundesbank’s Monthly Report.


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Posted by David Morrison

Category: AM Bulletin

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