Incisive market commentary from David Morrison

Stay ahead with our market commentary and webinars from our in house market strategist

Open a Live AccountOpen a Demo Account
+ Show blog menu



Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
Expand November <span class='blogcount'>(26)</span>November (26)
Expand October <span class='blogcount'>(24)</span>October (24)
Expand September <span class='blogcount'>(33)</span>September (33)
Expand August <span class='blogcount'>(26)</span>August (26)
Expand July <span class='blogcount'>(32)</span>July (32)
Collapse June <span class='blogcount'>(28)</span>June (28)
Investors on edge after Wall Street sell-off
30 Jun 2017
Central bankers keep traders guessing - Video Update
29 Jun 2017
Markets mixed ahead of weekend - AM Briefing
23 Jun 2017
Investors concerned over oil sell-off - AM Briefing
22 Jun 2017
Crude oil hits seven-month low - Video Update
21 Jun 2017
Sell-off in crude weighs on equities - AM Briefing
21 Jun 2017
Crude falls back to November lows - PM Bulletin
20 Jun 2017
Fresh records for US indices - AM Briefing
20 Jun 2017
Equity rally resumes - AM Briefing
19 Jun 2017
Markets steady ahead of weekend - AM Briefing
16 Jun 2017
FOMC surprises with “hawkish rate hike” - Video Update
15 Jun 2017
Fed unveils “hawkish rate hike” - AM Briefing
15 Jun 2017
FOMC rate decision in focus - Video Update
14 Jun 2017
Investors expect another Fed rate hike - AM Briefing
14 Jun 2017
FOMC look-ahead - PM Bulletin
13 Jun 2017
NASDAQ futures recover in early trade - AM Briefing
13 Jun 2017
Equities slide after US tech sell-off - AM Briefing
12 Jun 2017
May-hem! Tories chuck away majority - AM Briefing
09 Jun 2017
Brief notes on gold - PM Bulletin
08 Jun 2017
Markets calm as investors take “Risky Thursday” in their stride
08 Jun 2017
Markets becalmed ahead of “Risky Thursday” - AM Briefing
07 Jun 2017
Sterling, events on Thursday and the UK election
06 Jun 2017
Safe havens in demand - AM Briefing
06 Jun 2017
Trading Guides - How CFD trading works
05 Jun 2017
Sterling steady after terror attack - AM Briefing
05 Jun 2017
Non-Farm Payrolls in focus - AM briefing
02 Jun 2017
Non-Farm Payroll look-ahead - Video Update
01 Jun 2017
Crude bounces after US inventory data - AM Briefing
01 Jun 2017
Expand May <span class='blogcount'>(35)</span>May (35)
Expand April <span class='blogcount'>(31)</span>April (31)
Expand March <span class='blogcount'>(38)</span>March (38)
Expand February <span class='blogcount'>(36)</span>February (36)
Expand January <span class='blogcount'>(39)</span>January (39)
Expand 2016 <span class='blogcount'>(483)</span>2016 (483)


Early moves

·         Cable holding around 1.2900

·         Crude lower on gasoline build

Trading was relatively quiet first thing this morning as market participants prepare themselves for an event-packed Thursday. Tomorrow sees the UK general election, an important ECB meeting and former FBI Director James Comey’s testimony before Congress.

All the major global stock indices are trading in tight ranges although there’s a slightly more positive tone than there was yesterday. Meanwhile, precious metals are managing to hold on to Tuesday’s gains and cable continues to hover around 1.2900 - suggesting that FX traders expect the Conservatives to gain seats in tomorrow’s vote.

Crude oil is weaker again this morning following last night’s US inventory update from the American Petroleum Institute. This recorded a bulid in gasoline stockpiles of over 4 million barrels, miles above the 50,000 barrel draw expected. Meanwhile, investors continue to mull the ramifications of the Saudi-led alliance cutting diplomatic ties with Qatar.

Stock Index Update

·         Investors cautious ahead of tomorrow’s events

·         Markets still expect Tory win

All the US majors ended yesterday modestly lower but remain close to record highs. Investors appear to be trimming back their exposure ahead of an event-packed session tomorrow.  We have an important ECB meeting and former FBI Director James Comey is set to testify before Congress. We also have the UK General Election which is playing out against a backdrop of the terror attacks in London and Manchester. Recent opinion poll results have proved erratic with the Tory lead over Labour being anything from 1 to 11 points. However, betting markets still have Theresa May’s party picking up an additional 30 seats or so which would be a decent result for the Conservatives given the recent wobble. Investors appear to agree with the punters with sterling holding up well and trading above 1.2900 against the US dollar.

All the European majors posted losses yesterday, although the UK’s FTSE100 ended the day less than 1 point lower. In contrast the German DAX fell over 1%. The banking sector came under pressure with investors rattled over Spanish lender, Banco Popular. This again was among the worst performing stock as its shares fell over 6% yesterday.

Commodities Update

·         Gasoline inventory build weighs on crude

·         Precious metals hold gains

The American Petroleum Institute (API) released its latest US crude oil inventory update after last night’s close. This showed yet another bigger-than-expected drawdown of crude stockpiles, but this was more than offset by a surge in gasoline inventories which recorded their largest build since the beginning of the year. Overall this proved bearish for crude and both WTI and Brent continue to trade below $50. The Energy Information Administration (EIA) will release its own update later this afternoon.

Investors remain concerned by Monday’s news that a Saudi-led coalition has broken diplomatic ties with Qatar. Saudi Arabia, Bahrain, Egypt and the United Arab Emirates suspended all air and sea travel to and from Qatar blaming the latter’s support for terrorist groups for the decision. The news initially led to a bounce in oil prices as it suggested that Qatar may have trouble exporting some of its 600,000 barrel per day output. However, Monday’s rally soon ran out of steam as investors considered that a fall-out between Qatar and other OPEC members could lead to a breakdown in the output cut agreement.

Gold and silver shot higher in early trade as investors sought to diversify into safe havens. Much of the move comes on the back of concerns about events on Thursday. This is when we have the UK General Election, an ECB rate setting meeting and testimony from sacked FBI director James Comey. Nevertheless, there’s plenty of upside momentum in both precious metals as investors increasingly view them as undervalued relative to other financial instruments. There were a number of times during the day when both metals slipped back on profit-taking. However, these sell-offs were generally shallow and simply gave buyers a better price to establish long positions. Gold has now retraced the whole of its sell-off since mid-April. If it can manage to break and hold above $1,300 then it could be set to make further gains. Silver is lagging gold to some extent, although it’s fair to say that silver’s sell-off from 17th April to early May was considerably larger in percentage terms (14%) than gold’s (6%).

Forex Update

·         Japanese yen rallies in “risk-off” move

·         Sterling holds recent gains

After a quiet start to the week there was significantly more volatility in FX yesterday. The biggest mover was the Japanese yen which rallied sharply against all the majors. This was part of a general “risk-off” move which also saw investors pile into precious metals and trim their exposure to European and US indices. Typically, we see the Japanese yen rally when investors cut back on their risk exposure. This is because market participants buy back the yen they previously sold (borrowed at low yields) in order to use the proceeds to invest in riskier assets.

Meanwhile, sterling managed to hold on to gains made earlier in the week. No matter what the opinion polls are saying, investors seem convinced that the Tories will gain seats in Thursday’s General Election. This should strengthen Theresa May’s hand when it comes to negotiating Brexit.

Upcoming events

Today’s significant events and economic data releases include German Factory Orders, Italian Retail Sales and US Crude Oil Inventories.


Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.


Posted by David Morrison

Category: AM Bulletin

Add a comment Add comment            


© 2018 Spread Co Limited. All Rights Reserved.

Spread Co Limited is a limited liability company registered in England and Wales with its registered office at 22 Bruton Street, London W1J 6QE. Company No. 05614477. Spread Co Limited is authorised and regulated by the Financial Conduct Authority. Register No. 446677.

Spread betting and CFD trading are leveraged products and can result in losses that exceed your deposits. Ensure you understand the risks.

Losses can exceed deposits. Click here to learn more.