Incisive market commentary from David Morrison

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Bounce in oil helps to steady equities - AM Briefing
30 Mar 2017
US stock indices consolidate - Video Update
29 Mar 2017
Risk appetite returns - AM Briefing
29 Mar 2017
S&P500 - Topping out, or consolidating? PM Bulletin
28 Mar 2017
Risk appetite returns after the Trump wobble - AM Briefing
28 Mar 2017
Beware hidden relationships between seemingly unrelated markets - Trading Guides
27 Mar 2017
Risk assets slump in wake of Trump’s healthcare debacle - AM Briefing
27 Mar 2017
Congress vote puts markets on hold - AM Briefing
24 Mar 2017
Markets on hold ahead of crucial vote - Video Update
23 Mar 2017
Tranquil markets await big data - AM Briefing
23 Mar 2017
Investors rattled after equity sell-off - Video Update
22 Mar 2017
US Markets Snap 109-Day Streak - AM Briefing
22 Mar 2017
Crude oil update - PM Bulletin
21 Mar 2017
European markets stable on the open - AM Briefing
21 Mar 2017
Dollar slips after G20 communique - AM Briefing
20 Mar 2017
FOMC post-mortem - Video Update
16 Mar 2017
Rate hike sends stocks higher - AM Briefing
16 Mar 2017
FOMC rate decision and Dutch election in focus - Video Update
15 Mar 2017
Oil rally gives markets lift - AM Briefing
15 Mar 2017
Crude trades at lowest levels since production cut agreement - PM Bulletin
14 Mar 2017
Politicians take centre stage again - AM Briefing
14 Mar 2017
Trading Psychology: Risk Management - Trading Guides
13 Mar 2017
Article 50 deadline approaches - AM Briefing
13 Mar 2017
European stocks push higher after Draghi’s hawkish stance - AM Bulletin
10 Mar 2017
Non-Farm Payroll look-ahead - PM Bulletin
09 Mar 2017
Fed rate hike seems certain - AM Briefing
09 Mar 2017
Market expects Fed to hike rates next week - Video Update
08 Mar 2017
Another twist in the French election - AM Briefing
08 Mar 2017
Odds slashed on Fed rate hike - PM Bulletin
07 Mar 2017
Investors lacking direction this morning - AM Briefing
07 Mar 2017
Fibonacci Retracement - extensions - Trading Guides
06 Mar 2017
Equities slip in early Monday trade - AM Briefing
06 Mar 2017
Modest profit-taking sees US indices post rare loss - AM Briefing
03 Mar 2017
Crude struggles to break above resistance - Video Update
02 Mar 2017
UK baffled by the origins of their favourite brands - PM Bulletin
02 Mar 2017
Fresh record highs for major indices - AM Briefing
02 Mar 2017
All eyes turn to the Fed - Video Update
01 Mar 2017
Markets react positively to Trump speech - AM Briefing
01 Mar 2017
Expand February <span class='blogcount'>(36)</span>February (36)
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Early moves

·         Europe heads for the sky

·         Employment data on the mind across the pond

·         ECB keeps rates unchanged, but mentality is certainly different

European equities have stormed higher in early trade this morning despite a lacklustre close on Wall Street last night. Nevertheless, there’s some relief that US equity markets have steadied after drifting lower over the past week or so. There is also a feeling that we’ve seen the worst of the sell-off in crude oil with the market now less overbought than it was at the beginning of the week. Meanwhile, gold and silver continued to take a hammering as investors price in further monetary tightening from the US Federal Reserve.

All eyes are on today’s US Non-Farm Payroll release. Analysts now expect payrolls to rise by around 200,000. This is up from the 185,000 consensus from earlier in the week thanks to a very strong ADP number on Wednesday. In fact, it’s quite possible that today’s release ends up being one of those upside blow-out numbers that occasionally crop up from nowhere. Consequently, there are few worries that it will throw off the Fed from hiking rates at next week’s meeting. In fact, the debate has now moved on to ponder whether the US central bank could be gearing up for a total of four 25-basis point hikes in 2017.

Yesterday saw the ECB, as expected, make no changes to either of their interest or deposit rates. Nobody really paid attention to this aspect of the meeting, though, as eyes were firmly fixed on Mario Draghi for his speech afterward. It didn’t disappoint. The ECB have raised their growth forecasts for 2017 and 2018 by 0.1% each, resulting in 1.8% and 1.7%, respectively. Inflation projections also improved from 1.3% to 1.7% for the year, showing the markets the ECB have more confidence in the EU after a turbulent time of late. Draghi also spoke of his, and the council’s beliefs that no more monetary easing should be needed for the Eurozone, with the days of cheap lending to financial institutions behind them now, all of which were seen as signs of strength by investors.

Stock Market Update

·         London faces off against New York for Saudi Aramco listing

·         BT agrees to let Openreach go

Executives from both the London and New York stock exchanges have met with Aramco in an attempt to sway its decision over where to float. Although official oil reserve data is hard to come by currently for the State-owned producer, estimates are weighing in that the company could be worth up to $2 trillion. The company has stated in the past that it is looking to float a 5% stake, making this potentially the largest IPO in history at $100 billion, however it is unclear as to how the slump in oil prices has affected business. According to media sources both exchanges fancy themselves as favourites at this moment in time.

BT Group shares soured on the open this morning, as at long last they have agreed to separate from their Openreach infrastructure arm as pressure from Ofcom finally overcomes their efforts to end this long-running battle. With Openreach providing broadband to millions of customers in the UK, it has helped provide financial security to BT for years. BT shares were up as high as 4%.

Commodities Update

·         Crude pushes off of 3 month lows

·         Precious metals continue to slide lower

Crude oil prices crawled back up slightly this morning after smashing down through the $50 mark on Thursday. Confidence in the market has wavered lately, after a great rally from the OPEC/non-OPEC cuts was met by a resurgence in US shale drilling. With advanced economies moving ever closer to renewable energy sources supply is once again outweighing demand, with stockpiles building in the US causing concerns for traders.

Gold prices also fell through a major psychological level this morning, trading below the $1,200 mark to hit levels not seen since the end of January. The pressure from a rate hike is doing some real damage to dollar-priced commodities, with silver breaking down below $17 an ounce. Only copper seems to be bucking the trend, with very slight gains since yesterday’s close in New York.

Forex Update

·         Draghi comments push the euro higher

·         Dollar retains strength

The euro seemed full of life yesterday after Draghi’s comments excited the markets into pushing it higher against the dollar, sterling and the yen. His comments have left some to interpret there will be no further increase in quantitative easing for the Eurozone, of which there is always a fear of whenever the ECB meet. The fears of deflation also seemed to have disappeared, although he was honest in his speech when addressing Brexit and the French elections, recognizing they pose a downside risk, however the effects they could have on Europe’s economy are difficult to predict.

Aside from the push higher from the euro, the dollar was able to keep all other counterparts at bay ahead of employment data later this afternoon. The safe haven yen is trading at its lowest level since January 19th, as the markets prepare to take on more risk with the rate hike looking ever more likely. There is not expected to be much movement in the majors in the run-up to Nonfarm Payrolls, but as always prepare for volatility after.

Upcoming Events

Amongst today’s significant economic data releases and events we have Consumer Inflation Expectations for the UK this morning followed by US employment data, including the all-important Nonfarm Payrolls in the afternoon.


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Posted by Michael Campbell

Category: AM Bulletin

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