Incisive market commentary from David Morrison

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AM Bulletin: Markets rise for the second day ; back to pre-referendum levels, sterling still weak
30 Jun 2016
AM Bulletin: Confidence returns – but for how long?
29 Jun 2016
AM Bulletin: The onslaught continues – and we’re not just talking the football
28 Jun 2016
Weekly Bulletin: Investors rattled by Brexit vote
27 Jun 2016
PM Bulletin: Brexit - Referendum fallout
24 Jun 2016
AM Bulletin: We’re out! And so is Cameron
24 Jun 2016
Video Update: #AskSpreadCo - EU referendum
23 Jun 2016
AM Bulletin: Markets on tenterhooks ahead of UK vote
23 Jun 2016
Spread Betting Tips
22 Jun 2016
AM Bulletin: Risk assets waft higher
22 Jun 2016
PM Bulletin:Referendum and Market Reaction
21 Jun 2016
PM Bulletin: Gold and the referendum
21 Jun 2016
AM Bulletin: Yellen testimony in focus
21 Jun 2016
PM Bulletin: Janet Yellen’s testimony
20 Jun 2016
Weekly Bulletin: It’s all about the referendum
20 Jun 2016
Market Info Update: EU Referendum Margin Changes - CFDs
17 Jun 2016
Market Info Update: EU Referendum Margin Changes - Spread Betting
17 Jun 2016
PM Bulletin: Forecasting the referendum result
17 Jun 2016
AM Bulletin: Central banks leave rates unchanged
17 Jun 2016
PM Bulletin: FOMC post-mortem
16 Jun 2016
AM Bulletin: Yen, precious metals soar post FOMC/BOJ
16 Jun 2016
PM Bulletin: FOMC look-ahead
15 Jun 2016
AM Bulletin: FOMC meeting ahead
15 Jun 2016
PM Bulletin: European equities slide
14 Jun 2016
AM Bulletin: Stocks down on oil, growth fears and UK referendum
14 Jun 2016
Weekly Bulletin: FOMC and BOJ meetings in focus
13 Jun 2016
PM Bulletin: Markets rattled by slide in bond yields
10 Jun 2016
AM Bulletin: European stock indices drift lower
10 Jun 2016
PM Bulletin: WTI at $50 – thoughts on US production
09 Jun 2016
AM Bulletin: Precious metals soar
09 Jun 2016
PM Bulletin: S&P closes in on all-time high
08 Jun 2016
AM Bulletin: Investors in limbo ahead of Fed and UK vote
08 Jun 2016
PM Bulletin: Yellen and the jobs data
07 Jun 2016
PM Bulletin: Fresh polls send sterling lower
06 Jun 2016
Weekly Bulletin: Rate hike? What rate hike?
06 Jun 2016
PM Bulletin: A dismal Non-Farm Payroll number
03 Jun 2016
AM Bulletin: Non-Farm Payroll Friday
03 Jun 2016
PM Bulletin: Non-Farm Payrolls look-ahead
02 Jun 2016
AM Bulletin: OPEC, ECB, key data releases and central bank speakers
02 Jun 2016
PM Bulletin: OPEC and the oil price
01 Jun 2016
AM Bulletin: Manufacturing PMIs in focus
01 Jun 2016
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Indices Update
After two days of severe hammering from the results of ‘Brexit’, European stocks caught a break and showed signs of clawing back some of their two-day losses, recording their best prices in a week.  The Stoxx Europe 600 rose 2.5% as confidence eased back into the markets, after reports that the Italian government is looking to add €40 billion to the country’s financial system as protection after the UK’s vote to leave. As expected, Italian bank stocks pushed up. This is a sign to investors that policy makers will take steps to limit any economic fallout and central banks will have to act sooner rather than later. A two-day European council summit is gathering in Brussels to further discuss Britain’s decision to leave the EU, giving investors further knowledge of the future effects. Investor confidence has been shattered for the UK, after being downgraded by every ratings agency for their decision to leave the EU.
The German Dax added 2.4% to close at 9,487.13 with gains lead by pharmaceuticals & healthcare, food & beverages and the telecoms sector. In London, the FTSE 100 showed similar gains by adding 2.2% on close to finish at 6,115, led by gains in industrial metals & mining, life insurance and food producers. France’s CAC added 2.7% with gains in healthcare, utilities and financial sectors leading gains in the index. 
Gains weren’t limited to European markets, as the US took massive strides to regain ground lost in the past two sessions. All three major indices finished in the green, with the Dow Jones up 1.6%, the S&P 500 up 1.8% and the Nasdaq Composite up 2.1% at the closing bell. Some have speculated this could be part of a “dead cat bounce” – a brief rebound during a large slump. It seems time will tell whether this scepticism becomes reality, or remains mere theory.
Overnight Asian markets continued the global rise with a 1.6% increase in the Nikkei leading the way. However, all is still not well in the world’s third largest economy, as all bonds out to 40 years are still offering yields of less than 0.1%, crippling pension funds.
Equities Update
AstraZeneca shares rose approx. 3% after winning approval for a new antibiotic. They won a European regulatory approval for Zavicefta, a combination antibiotic developed to treat serious infections that have become resistant to antibiotics. The approval applies to all 28 EU members.
Other big movers in Europe include Volkswagen AG who added 2.6%. After so much bad news about its emission scandal, the automaker is now expected to announce $15 billion measures aimed to resolve this in the US. Insurer Prudential PLC and Legal and General Group PLC added over 7% after assuring investors, before the referendum, of a ‘strong regulatory capital balance sheet’ building confidence in the resilience of the companies.
The Siemens Energy Sector came out stating it has back-benched its new wind power investment plans until Britain’s future relationship with the EU becomes clearer. It is no secret that the EU has invested heavily in renewable energy projects, with the UK taking the lion’s share of funding. However, uncertainty surrounding the freedom of trade and possible introduction of tariffs has left the UK in limbo with energy firms, impatiently awaiting Article 50 to be triggered.
Toyota made the headlines after announcing a recall of 482,000 vehicles due to a safety issue. The Japanese car giant stated the affected cars may have a faulty air bag inflator, which could possibly lead to the air bags inflating unexpectedly. 
Commodities Update
Oil prices are pushing back up to that $50 mark again, largely due to a potential oil workers’ strike in Norway and the ongoing crisis in Venezuela, who desperately need the commodity to return to three-digit territory. This morning Brent was trading higher at $48.84 a barrel while US Crude was up to $48.20 a barrel. Another indicator of shorter supply came from the American Petroleum Institute, who reported a decrease in US Crude of 4 million barrels for the week ending June 24th, nearly double expectations. Although API figures are not taken as the official number for stockpiles, they do tend to give a good indication of things to come.
Precious metals saw a selloff in Tuesday’s session, as sentiment returned to the stock markets following the post-Brexit slump pushing Gold prices down 0.9%. However, the Asian session threw caution to the wind and has since reversed that trend. Gold saw a rebound of 0.4%, trading early this morning at $1,323. Analysts have commented that should the UK’s negotiations with the EU continue to cause uncertainty, gold could be trading higher. Among the other metals, the more volatile silver was up this morning 2.5% to £18.20 an ounce.
Forex Update
The pound had its best session since the Referendum as investor confidence slowly began to return to the UK, creeping off the 31-year low it reached on Monday to hit 1.3337 against the US Dollar (up 0.84%). Sterling also managed to strengthen against the euro with EURGBP up 0.32% to 0.8307, even as the euro trumped the dollar to hit 1.1071 for the EURUSD pair.
The long-established mentality of “safe haven” currencies was again in effect, as both the yen and Swiss franc moved lower with money returning to the stock markets. Against the dollar, USDJPY was up 0.17% at 102.17 while USDCHF increased 0.14% to 0.9798.
Upcoming events
The EU Economic Summit will continue into its second day, so expect plenty more Brexit talk to follow. Also on the agenda are US Crude oil inventories and month-on-month Pending Home Sales, with analysts expecting figures of -2.365m and -1.1%, respectively.
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Posted by David Morrison

Category: AM Bulletin

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