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21 Jul 2016
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20 Jul 2016
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19 Jul 2016
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18 Jul 2016
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15 Jul 2016
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15 Jul 2016
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14 Jul 2016
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14 Jul 2016
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13 Jul 2016
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11 Jul 2016
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11 Jul 2016
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08 Jul 2016
PM Bulletin: Non-Farm Payroll look-ahead
07 Jul 2016
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07 Jul 2016
AM Bulletin: Concerns continue as Sterling touches $1.27
06 Jul 2016
AM Bulletin: Markets open higher, weak UK Construction PMI data removes confidence
05 Jul 2016
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04 Jul 2016
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01 Jul 2016
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Indices update

Financial stocks took another beating yesterday in the European session with increasing uncertainty over the UK’s future weighing on both the pound and stock market. The FTSE100 slid 1.3% to close at 6,463.59, with the likes of Lloyds, RBS and Barclays falling between 3.1%-6.8%. Three more fund managers have now frozen their property funds due to the selloff, with Henderson Global Investors, Columbia Threadneedle Investments and Canada Life joining Standard Life, M&G and Aviva to take the tally to six funds. On the back of this, shares of Barratts and Taylor Wimpey were down 5.1% and 4.5%, respectively. The woes spread across the continent, with financials leading the 1.7% fall in the Dax as the likes of Deutche Bank suffered a horrid session to finish at an all-time low.

The US session saw much more optimism, as the American markets brushed aside Brexit worries to finish the day in positive territory. Yesterday saw a busy day for Americans, with the latest FOMC minutes from their June 14th-15th meeting, US trade balance and ISM service PMI all released in a short space of time, along with Fed member Tarullo speaking in Washington. The Fed’s minutes brought about the most bullish action of the day, as they revealed the influence of the more dovish members had spread throughout the group, resulting in no action being taken with interest rates. This, of course, is great news for stocks, which gained ground over the course of the session. The Dow finished up 0.4% at 17,918.62, with the S&P closing 0.5% higher at 2,099.73 and the Nasdaq Composite settled up at 4,859.16, a 0.8% rise.

US trade balance, a figure that measures the difference in the value between imported and exported goods and services, came out lower than expected at 41.14 billion. This is the third reading in a row showing an increased (10% wider) trade deficit from the previous month. Much of this has been attributed to higher oil prices and greater demand for luxury imports. Giving a contrasting view to the trade balance result, US ISM non-manufacturing PMI came out much higher than expected at 56.5. A positive reading such as this would suggest the service sector in the US is expanding beyond the glut seen in May. The dovish tone of the Fed minutes rang throughout Tarullo’s speech at the WSJ Pro event, as he warned the US markets have merely felt the tip of the Brexit iceberg so far and supported the idea of delaying the next interest rate hike until inflation reaches 2% again.

The Asian session saw much of the same as worried investors continued to flock towards the yen, dragging the Nikkei down a further 1.9%. Banks, exporters and energy shares suffered more than most during the session. China’s Shanghai Composite broke the trend in the region, gaining 0.4%, while Hong Kong’s Hang Seng lost 1.2%.

Equities update

In times of worry, buy gold. That old sentiment has proven itself time and time again, and this post-Brexit stock market apocalypse is no different. Gold miners topped the FTSE100 index in Wednesday’s session, with one of the biggest, Fresnillo, adding more than 6% to its share price.

Yesterday’s session saw the record books get thrown out in Europe, as banking shares touched levels never seen before. Credit Suisse was trading at €9.91, breaking through the €10 mark for the first time ever. Deutsche Bank was another to add 6th July as their all-time low, closing down at €11.54.

Commodities update

Gold prices have held their ground over the past day, keeping in touch of the 28-month high set a day earlier, with a sense of anticipation ahead of Nonfarm payrolls this Friday. The August contract for Gold was seen trading 70 cents higher this morning at $1,367.80, with Spot Gold around the same price. Silver is still holding strong above the $20-mark, after dropping slightly from the highs seen early yesterday.

Oil prices were seen ticking up early this morning, after the pre-emptive API report showed US stockpiles have decreased by 6.7 million barrels. If this proves to be accurate when official figures come out later today, it would be the seventh straight decrease. This would be great news for prices, which have been struggling for the past year and a half now. The Brent contract was up 28 cents early this morning, trading at $49.08, while US crude saw a similar increase of 27 cents to $47,70 a barrel.

Forex update

The pound is seeing strong resistance at the $1.30-mark, struggling to gain enough momentum to take it back to pre-Brexit levels as confidence in the strength of sterling seems shattered recently. During yesterday’s European session, GBPUSD was trading around $1.2930.

USD/JPY dropped to a low of 100.18 before recovering quickly and strongly to an overnight high of $101.46.  Investors believe the pair will continue to test the $100 mark.  EUR/USD closed on a bullish note yesterday with prices slowing down at around €1.110. Overall the dollar has lost momentum in the wake of non-farm payrolls as investors gear up for Friday’s data.

Upcoming events

Today’s significant data releases and events include UK Manufacturing and Industrial Production figures in the morning, ECB Monetary Policy Meeting accounts and US ADP Employment change around midday, with Crude Oil Inventories later on in the afternoon.

Disclaimer:
   
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 Michael Campbell

Category: AM Bulletin


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