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Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
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Markets drift ahead of weekend - AM Briefing
24 Nov 2017
US closed for Thanksgiving - AM Briefing
23 Nov 2017
Wall Street hits fresh record highs - AM Briefing
22 Nov 2017
The UK100 and sterling - PM Bulletin
21 Nov 2017
Equities drift in featureless trade - AM Briefing
21 Nov 2017
German coalition talks collapse - AM Briefing
20 Nov 2017
Quiet start after Wall Street surge - AM Briefing
17 Nov 2017
Global stock indices steady - AM Briefing
16 Nov 2017
Is this the start of a stock market correction? - Video Update
15 Nov 2017
Crude sell-off rattles investors - AM Briefing
15 Nov 2017
GBPUSD testing support - PM Bulletin
14 Nov 2017
Central bankers meet in Frankfurt - AM Briefing
14 Nov 2017
Sterling under pressure - AM Briefing
13 Nov 2017
Indices in retreat ahead of weekend - AM Briefing
10 Nov 2017
Could low volatility trigger a market correction? - Video Update
09 Nov 2017
All quiet on the Western Front - AM Briefing
09 Nov 2017
WTI crude surges through resistance - Video Update
08 Nov 2017
Investor inertia sees equities drift - AM Briefing
08 Nov 2017
Crude in demand - PM Bulletin
07 Nov 2017
Fresh record close for Wall Street - AM Briefing
07 Nov 2017
EURUSD shows clear “head and shoulders” - PM Bulletin
06 Nov 2017
Cautious start to trading week - AM Briefing
06 Nov 2017
Traders look ahead to Non-Farm Payrolls - AM Bulletin
03 Nov 2017
Traders look ahead Friday’s US Non-Farm Payrolls - Video Update
02 Nov 2017
BoE expected to raise rates - AM Briefing
02 Nov 2017
Equities soar on US corporate tax cut hopes - AM Briefing
01 Nov 2017
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Early moves

·         European indices mixed

·         Crude oil steady

European stock indices were mixed in early trade this morning, despite yesterday’s powerful bullish surge on Wall Street. There had been concerns earlier in the week that a pull-back in global equities was set to develop into a full-blown correction. However, that proved to be a tad pessimistic as investors did what has repeatedly worked so well over the past year and bought the dip. That certainly worked yesterday as the Dow and S&P500 ended the day up around 0.8% each while the NASDAQ100 rose 1.3% matching its all-time record closing high.

But European indices and US stock index futures turned lower in the immediate aftermath of a speech from European Central Bank President Mario Draghi. Mr Draghi was upbeat on the prospect of future Euro zone growth, but warned that the ECB needed a “patient, persistent approach.”

But otherwise it’s been a quiet start to Friday’s trade with the EURUSD little-changed and crude oil steady.

Stock Index Update

·         US indices surge higher

·         Walmart results cheer investors

European stock indices and US stock index futures began yesterday’s trading session in positive territory. Once again, investors took the opportunity of a brief market sell-off to rush back in and “buy the dip”. Sentiment turned from bearish to bullish after the US majors rallied off their lows on Wednesday and the Japanese Nikkei ended yesterday morning 1.5% higher, erasing a large chunk of its losses from earlier in the week. In addition, crude prices steadied following Tuesday’s steep decline while the dollar rallied. Later on, Walmart shares rose 4% in pre-market trade, boosted by a strong set of third quarter results. Online sales rose 50% in the third quarter while US same-store sales were up for the 13th consecutive quarter. Earnings per share came in at $1.00 on revenues of $123.2 - better than the consensus forecasts of $0.97 and $121 billion respectively. In addition, the retail giant raised its full-year earnings expectations. The rally gathered momentum as the trading day progressed and Walmart finished 10.9% higher, contributing significantly to the Dow’s rise of 187 points.

In other news the US House of Representatives passed a version of the Republican’s tax reform plan. This appears to bring the proposed corporate tax cut (20% from 35%) significantly closer with some commentators now convinced that a bill will be passed before the year-end or early in the New Year. However, the chances of the bill passing through the Senate in its present form look remote. On Wednesday Ron Johnson became the first Republican senator to say officially that he would oppose the bill, saying it unfairly favours big corporations at the expense of smaller businesses. Trump can afford to lose the votes of just two Republican senators, and it appears that Jeff Flake, Susan Collins, John McCain and Ted Cruz all have reservations about the proposals.

Commodities Update

·         Oil consolidating after Tuesday’s slump

·         Precious metals push higher

Crude prices were little-moved for most of yesterday’s session. Both Brent and WTI gave up early gains but were confined in relatively narrow trading ranges. Nevertheless, both contracts continue to steady after falling sharply during Tuesday’s session. Traders rushed to cut their long-side exposure after the International Energy Agency’s (IEA) released its annual World Energy Outlook. Investors were wrong-footed after the IEA cut its global demand growth outlook by 100,000 barrels per day (bpd) throughout 2017 and 2018. This was in stark contrast to a report from OPEC at the beginning of the week anticipating global demand growth of 74,000 bpd to 1.53 million bpd. There was further bearish news for crude prices after both the American Petroleum Institute (API) and Energy Information Administration (EIA) reported unexpected builds in crude and gasoline inventories. To cap it all the EIA also announced that US crude production had risen to a fresh record high. But there’s a feeling that market participants may hold off from taking on extra exposure ahead of the OPEC meeting at the end of this month. OPEC and non-OPEC producers are expected to extend their output cut agreement in an effort to lift prices. Any disappointment then could lead to a sharp pull-back in prices.

Gold and silver were weaker in early trade yesterday, continuing a sell-off from late on Wednesday. However, both metals recovered in Thursday’s afternoon session in a move which saw gold push back above $1,280 and silver dig in above $17 per ounce. The dollar was a touch weaker, but not enough to have any significantly positive affect on dollar-denominated commodities. Rather, it felt as if yesterday’s gains were broadly technical and based on a slight upward price trend in both metals over the last three weeks. But bullish investors really need to see gold bed in above $1,280 before the metal has a chance of pushing back up towards $1,300. Similarly, silver needs to push above the $17.20 level to bring serious buyers back into the market. On their daily charts gold and silver have had a succession of higher lows since the last week of October. However, in both cases the upside looks capped around $1,290 and $17.20 respectively. A pull-back in the dollar would help, as would a more significant pull-back in global equities.

Forex Update

·         GBPUSD pushes above 1.3200

·         Resistance comes in around 1.3300

Sterling got a bit of a lift yesterday morning following the latest update on UK Retail Sales. This rose 0.3% in October from the previous month which was better than the 0.1% increase expected. It also represented a decent recovery from the 0.7% decline in September. The GBPUSD has pushed above 1.3200 this morning and continues to look positive from a technical standpoint with support holding around 1.3100 for now. If cable can now hold above 1.3200 over the couple of trading sessions then the next obvious upside target is 1.3300 which has acted as resistance in October and again at the beginning of this month. Sterling benefitted this week from a strong performance from Theresa May at Prime Minister’s Questions in parliament on Wednesday. She appeared to unite her party once again with even those Tory MPs who oppose Brexit proving supportive. Sterling also made gains versus the euro as the EURGBP pulled back sharply from resistance around 0.9000. There are concerns that sterling’s upside may be limited unless there’s faster progress in Brexit negotiations. However, there are hopes that a meeting today between UK Prime Minister Theresa May and  European Council President Donald Tusk could help smooth the path of future Brexit negotiations.

Upcoming events

Today’s significant events and economic data releases include speeches from European Central Bank (ECB) President Mario Draghi and German Bundesbank President (and ECB Governing Council member) Jens Weidmann. From Canada we have CPI and from the US we have Building Permits, Housing Starts and Mortgage Delinquencies.

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Posted by David Morrison

Tagged: Dollar ECB crudeoil Bullmarket DJIA

Category: AM Bulletin


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