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AM Bulletin: Equities and oil slip in early trade
31 Mar 2016
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31 Mar 2016
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30 Mar 2016
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30 Mar 2016
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29 Mar 2016
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29 Mar 2016
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24 Mar 2016
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24 Mar 2016
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23 Mar 2016
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23 Mar 2016
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22 Mar 2016
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21 Mar 2016
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18 Mar 2016
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18 Mar 2016
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17 Mar 2016
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17 Mar 2016
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16 Mar 2016
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16 Mar 2016
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15 Mar 2016
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15 Mar 2016
Weekly Bulletin: Central banks still in focus
14 Mar 2016
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14 Mar 2016
AM Bulletin: Confusion reins
11 Mar 2016
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11 Mar 2016
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10 Mar 2016
PM Bulletin: Mr Draghi fires his bazooka
10 Mar 2016
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09 Mar 2016
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09 Mar 2016
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08 Mar 2016
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08 Mar 2016
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07 Mar 2016
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07 Mar 2016
March: Non Farm Payrolls Out Today
04 Mar 2016
AM Bulletin: Markets quiet ahead of Non-Farms
04 Mar 2016
PM Bulletin: Meanwhile, over in silver...
04 Mar 2016
AM Bulletin: Equities consolidate
03 Mar 2016
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03 Mar 2016
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02 Mar 2016
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02 Mar 2016
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01 Mar 2016
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01 Mar 2016
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 Thursday 03 March 2016

AM Bulletin: Equities consolidate

 

 

Indices Update

Overnight China’s Caixin Services PMI came in at 51.2 which was below both the consensus expectation of 52.6 and the prior month’s reading of 52.4. Earlier this week China’s two manufacturing PMIs also undershot expectations. Despite this the Shanghai Composite ended a touch higher this morning although the Hang Seng closed a shade lower. The Nikkei was the best performer closing 1.3% higher on the day.

European and US stock indices marked time yesterday. Both sessions ended with mixed results. London ended a touch lower, while Germany was moderately firmer as were most US indices. It was essentially a day of consolidation following the sharp stock market rally earlier in the week.

It was also another day for mixed data releases. The UK Construction PMI came in at 54.2 against an expected reading of 55.5 and a previous of 55.0. This followed on from Tuesday’s weaker-than-expected UK Manufacturing release. Traders are now looking forward to the Services PMI which is released at 09:30 GMT today.

Meanwhile yesterday’s ADP payrolls rose 214,000 against an expected increase of 185,000. Last month’s number was revised down to 193,000 from 205,000. Overall this was a decent number and bodes well for tomorrow’s Non-Farm Payroll release.

The FTSE 100 index closed at 6,147.1 down 5.8 points on the day, or +0.1%

The German DAX rose 59.5 points or 0.6% to finish at 9,776.6

The US30 closed up 34.2 points to finish at 16,899.3. The S&P 500 rose 0.4% to close at 1,986.5 while the Nasdaq 100 ended effectively unchanged to close at 4,334.4

Equities Update

British broadcaster ITV (ITV) fell sharply yesterday despite announcing a 15% increase in full-year revenues to £3.3 billion. The company’s underlying profits rose 18% to £843million for the year to December 31, which was the sixth successive year-on-year increase. ITV also announced a special dividend of 10p per share and said that it expects to outperform the television advertising market in 2016. However, ITV also announced that its share of family viewing was down 3% as some programmes had disappointed and amid strong competition from the BBC. The shares closed 3.5% lower at 240.9 pence.

Commodities Update

Yesterday WTI hit its highest level since the beginning of January. However, it still has to bed in properly above $34 for this level of previous resistance can turn into support. If it can, then $36 is the next obvious upside target. Meanwhile near-month Brent closed above $36 for the third successive session. Above here there’s some mild resistance around $38, but otherwise its path looks fairly clear until it reaches the psychologically significant $40 level.

Oil continues to get a lift from continued talk of agreement being reached over an output freeze. So far, Saudi Arabia, Venezuela and Qatar together with non-OPEC Russia have all made positive noises about holding future production at January’s levels. It looks as if a meeting will be held later this month to discuss the plan and include other OPEC and non-OPEC producers. However, as noted before, a freeze is not a cut and the underlying fundamentals of the market haven’t changed, nor are about to change in the near-future. Supply looks set to exceed demand for a considerable period of time yet as record inventories have to be wound down. This has been brought into stark relief once again by this week’s US inventory data. Yesterday the Energy Information Administration (EIA) announced that as of last week, US stockpiles grew by 10.4 million barrels, up from 3.5 million previously and well above the 2.5 million barrels expected. The data confirmed Tuesday’s data release from the American Petroleum Institute which showed an inventory increase of 9.9 million barrels against an expected build of 3.6 million. However, crude prices were supported after the EIA also announced that US production has dropped by around 25,000 barrels per day (bpd) to 9 million bpd. Last April the US was pumping out around 9.6 million bpd.

On Tuesday it looked as if investors had lost patience with gold and silver and prepared to book profits. Both precious metals lost ground and ended lower on the day. The selling continued through yesterday morning and it looked as if the pair were about to suffer a significant pull-back. However, by Wednesday afternoon gold and silver were back in rally mode. Gold edged above $1,240 once again while silver traded either side of $15.

It’s difficult to predict where both may be heading in the short-term. It still looks to me as if gold is consolidating and forming a rising pennant. This would be particularly bullish if it could break and hold above $1,240 convincingly. However, there are other traders who now believe that gold is losing its upside momentum and is overdue a substantial pull-back. If so, then look for support to come in at $1,200 and if it breaks there then $1,180. Silver is harder to read, although if gold sells off, so will silver. $14.60 may offer some interim support but $14.40 looks more substantial.

Forex Update

It was another mixed FOREX session yesterday and the EURUSD pair ended the day little-changed. However, that’s not to suggest there weren’t some significant movers amongst the other majors. The Japanese yen ended the day higher against both the US dollar and the euro. This was despite the yen falling first thing with the USDJPY flying above 114.00 in early trade. However, profit takers came in to take advantage of the yen’s recent fall, no doubt with an eye on yesterday’s pause in the stock market’s recent rally. The British pound was another significant winner on the day against both the greenback and the euro. This too looked like a corrective move following sterling’s slump on Brexit fears. But the Australian dollar was yesterday’s stand-out winner. The AUDUSD has really found some upside momentum of late, no doubt boosted by a wave of short-covering. It has gained more than 6% since mid-January and is now butting up against resistance around 0.7300

Upcoming events

Today’s significant data releases include Spanish, Italian, French, German, Euro zone, UK and US Services PMIs. We also have Euro zone Retail Sales. From the US we have Weekly Jobless Claims, ISM Non-Manufacturing PMI and Factory Orders.

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 David Morrison

Tagged: AM Bulletin

Category: AM Bulletin


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