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)
Expand June <span class='blogcount'>(28)</span>June (28)
Expand May <span class='blogcount'>(35)</span>May (35)
Collapse April <span class='blogcount'>(31)</span>April (31)
GDP data in focus - AM Briefing
28 Apr 2017
ECB round-up and US GDP look-ahead - Video Update
27 Apr 2017
ECB meeting in focus - AM Briefing
27 Apr 2017
ECB's Rate Meeting, a look ahead - Video Update
26 Apr 2017
High hopes for Trump tax cuts - AM Briefing
26 Apr 2017
Global stock indices storm higher - PM Bulletin
25 Apr 2017
Indices mixed after firmer open - AM Briefing
25 Apr 2017
How to use Stop Losses in FX - Trading Guide
24 Apr 2017
French vote sees risk assets soar - AM Briefing
24 Apr 2017
Mixed European open despite Wall Street rally
21 Apr 2017
French Election in focus - Video Update
20 Apr 2017
French election and oil keep investors cautious - AM Briefing
20 Apr 2017
Equities off highs but still show resilience - Video Update
19 Apr 2017
Equities continue to drift lower - AM Bulletin
19 Apr 2017
Sterling soars on early UK election, but France the biggest concern
18 Apr 2017
Europe shrugs off US rally - AM Bulletin
18 Apr 2017
Trump's mouth sends dollar skidding lower - Video Update
13 Apr 2017
Dollar slumps on Trump comments - AM Bulletin
13 Apr 2017
Uncertain outlook ahead of holiday weekend - Video Update
12 Apr 2017
Equities recover after yesterday’s wobble - AM Briefing
12 Apr 2017
USDJPY approaching support - PM Bulletin
11 Apr 2017
Equities drifting in holiday-shortened week - AM Briefing
11 Apr 2017
Look-ahead to Janet Yellen’s speech this evening - PM Bulletin
10 Apr 2017
All eyes on G7 and Yellen - AM Bulletin
10 Apr 2017
US missile attack sends investors into “risk-off” mode - AM Briefing
07 Apr 2017
FOMC minutes rattle investors - Video Update
06 Apr 2017
Stunning reversal greets Fed minutes - AM Briefing
06 Apr 2017
ADP number points to big payroll beat on Friday - Video Update
05 Apr 2017
FOMC minutes in focus - AM Briefing
05 Apr 2017
US indices flag as first quarter ends - PM Bulletin
04 Apr 2017
Disappointing start to the new quarter - AM Briefing
04 Apr 2017
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

·         Equities mixed ahead of French election

·         Wall Street surges on hints of tax reform

There was another mixed open for European stock indices this morning which was disappointing given last night’s surge on Wall Street. Investors on this side of the Atlantic may take a cautious approach going into the weekend given the uncertainty ahead of Sunday’s first round of voting in the French presidential election. After all, it’s possible we start next week with two anti-European, and frankly anti-business, candidates for the deciding vote in May. Last night’s Paris attack has added to the febrile atmosphere with all 11 candidates holding off from campaigning today.

Meanwhile, US Treasury yields continue to rally on a reduction in geopolitical tensions and as Trump’s Treasury Secretary Mnuchin hinted that the administration was close to major tax reform. This has seen safe havens such as gold and silver pull back yet again.  At the beginning of the week both metals hit their highest levels since early November, just after Trump’s election victory.

Stock Index Update

·         Wall Street soars on hints of tax reform deal

·         Investors continue to “buy the dips”

European stock indices all ended higher yesterday. Partly this was due to a recovery in crude prices which fell sharply on Wednesday following news of an unexpectedly large increase in US gasoline inventories. After the European close US equites soared in a move which took the S&P back up to levels last seen two weeks ago. The Dow added over 170 points for the second time this week. Investors were cheered after US President Trump’s Treasury Secretary Steven Mnuchin hinted that the administration was close to major tax reform. But there’s also some bullishness returning as yields on US Treasuries bounce back and on the expectation that the first quarter earnings should hold up well despite a few negative surprises.

 Investors seem reluctant to push the major indices lower, despite an increase in geopolitical uncertainty and concerns that tighter monetary policy won’t be offset by fiscal stimulus as the Trump administration struggles to push its reforms through Congress. There’s an apparent resilience across Wall Street boosted by the knowledge that buying the dip over the past 8 years has been a money-making strategy.

Commodities Update

·         Crude set for weekly drop

·         Precious metals head lower

Crude oil spent the early part of yesterday trading in positive territory. Prices appeared to steady following Wednesday’s plunge as investors responded to the latest US inventory updates. However, both WTI and Brent gave up gains as the US session proceeded and crude now looks set to post its biggest weekly loss in four weeks.

On Wednesday the Energy Information Administration (EIA) recorded a significant build in gasoline stockpiles, confounding expectations of a large drawdown. The news confirmed Tuesday’s report from the American Petroleum Institute (API). Both reports also showed smaller-than-expected drawdowns in crude stockpiles and this initially meant that investors were unsure how to react to the data. However, a modest pull-back in WTI and Brent eventually turned into a rout as speculative longs were forced to cover adding to the downside momentum.

Gold and silver both marked time yesterday. Neither metal appeared to be much in demand despite a pull-back in the US dollar. Nor were investors buying precious metals as a safe haven play. This is despite the first round of the French presidential election taking place this Sunday. Polling suggests that any of the six possible combinations of the top four candidates could go through as the final two on May 7th. This means that the “nightmare” pairing of Marine Le Pen and Jean-Luc Melenchon is a real possibility. Both candidates are Eurosceptic. Le Pen wants to give up the euro and hold a referendum on EU membership. Melenchon would also demand a referendum if France was unable to renegotiate its relationship with the EU.

Forex Update

·         Dollar mixed

·         Euro shows resilience despite political uncertainty

The dollar slipped against most of the majors in early trade yesterday with most of its losses coming against the euro and British pound. This was a bit surprising given that US Treasury yields were ticking higher and this is generally supportive for the greenback.  The dollar managed to make modest gains against the Japanese yen which indicated some raised risk appetite amongst investors and this was reflected in some early strength across global stock indices.

Perhaps the biggest surprise in FX this week has been the ongoing strength of the euro. This has come about despite the uncertainty ahead of Sunday’s first round vote in the French presidential election. According to current polling the four main candidates are within 4 percentage points of each other. With a margin of error of 6% and an estimated third of French voters still undecided, this suggests the contest is wide open. The concern is that the two anti-Europe candidates Marine Le Pen and Jean-Luc Melenchon both win enough votes to go through to the deciding vote in May. If so, then we should expect the euro to come in sharply lower on Monday morning.

Upcoming events

Today’s significant economic data releases and events include French, German and Euro zone Flash Services and Manufacturing PMIs. We also have UK Retail Sales and Canadian CPI. From the US we have the Flash Manufacturing PMI, Flash Services PMI and Existing Home Sales. IMF meetings begin and there’s a speech from FOMC-voting member of the Fed, Neel Kashkari.


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.