Incisive market commentary from David Morrison

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Expand 2017 <span class='blogcount'>(348)</span>2017 (348)
Collapse 2016 <span class='blogcount'>(483)</span>2016 (483)
Expand December <span class='blogcount'>(23)</span>December (23)
Expand November <span class='blogcount'>(41)</span>November (41)
Collapse October <span class='blogcount'>(37)</span>October (37)
Central banks and US payrolls in focus - Weekly Bulletin
31 Oct 2016
Revised Trading Hours - UK British Summer Time (BST) ends, 30th October 2016
28 Oct 2016
US GDP in focus - AM Bulletin
28 Oct 2016
US stock indices still range-bound
27 Oct 2016
Equities drift on mixed earnings
27 Oct 2016
Earnings season, oil and the US dollar - Video Update
26 Oct 2016
Apple disappoints - AM Bulletin
26 Oct 2016
Silver range-bound - PM Bulletin
25 Oct 2016
Equities up on deals and earnings - AM Bulletin
25 Oct 2016
Spread betting charges – overnight financing - Trading Guide
24 Oct 2016
USD rally continues - Weekly Bulletin
24 Oct 2016
Deutsche Bank trades at pre-DOJ fine levels : AM Bulletin
21 Oct 2016
ECB Decision in less than 400 words - PM Bulletin
20 Oct 2016
Oil’s move to a 15-month high supports global markets - AM Bulletin
20 Oct 2016
Intel buck earnings trend as the Fed takes centre stage again - PM Bulletin
19 Oct 2016
WTI eyes resistance around June highs - PM Bulletin
18 Oct 2016
US/UK inflation data in focus - AM Bulletin
18 Oct 2016
How to know what to spread bet on : Trading Guides
17 Oct 2016
Dollar up on December rate hike speculation - Weekly Bulletin
16 Oct 2016
Oil sparks recovery on Wall Street - AM Bulletin
14 Oct 2016
FOMC minutes - hawkish or dovish? - PM Bulletin
13 Oct 2016
Weak Chinese trade number hits miners - AM Bulletin
13 Oct 2016
US indices range-bound ahead of election - Video Update
12 Oct 2016
FOMC minutes in focus - AM Bulletin
12 Oct 2016
Sterling at fresh multi-year lows : PM Bulletin
11 Oct 2016
Brent crude hits 12-month high - AM Buleltin
11 Oct 2016
How Spread Betting Works : Trading Guides
10 Oct 2016
Another disappointing US payroll report - Weekly Bulletin
09 Oct 2016
Sterling “flash crash” and US Non-Farm Payrolls - AM Bulletin
07 Oct 2016
Non-Farm Payroll look-ahead - PM Bulletin
06 Oct 2016
AM Bulletin: Equities up on data releases and oil
06 Oct 2016
Video Update: OPEC’s production cut promise poses some questions
05 Oct 2016
AM Bulletin: Precious metals slump on USD rally
05 Oct 2016
PM Bulletin: Sterling lurches lower
04 Oct 2016
AM Bulletin: Firmer start for global equities
04 Oct 2016
Trading Guide: How to use Stop Losses in spread betting
03 Oct 2016
Weekly Bulletin: Important week for data releases
03 Oct 2016
Expand September <span class='blogcount'>(41)</span>September (41)
Expand August <span class='blogcount'>(52)</span>August (52)
Expand July <span class='blogcount'>(38)</span>July (38)
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Expand March <span class='blogcount'>(41)</span>March (41)
Expand February <span class='blogcount'>(42)</span>February (42)
Expand January <span class='blogcount'>(39)</span>January (39)


Indices Update

European equities and US stock index futures are firmer in early trade this morning. Stock markets are managing to put aside yesterday’s pull-back on Wall Street. There has been a mild sell-off in crude oil in early trade, but this looks pretty insignificant given last week’s rally following OPEC’s commitment to an output cut. Overnight the Reserve Bank of Australia kept its headline Cash Rate unchanged at 1.5% as expected.

The German bourses were closed for a bank holiday yesterday. However, ADRs (American Depository Receipts) on Deutsche Bank (DBK) traded lower in the US and investors are still concerned about the health of the German giant. But in this morning’s early trade the stock has made back yesterday’s US losses.

On Friday morning shares in Deutsche Bank opened 8% lower taking them below €10 and to a fresh 24-year low. But they surged later in the day and closed over 7% higher. The turnaround followed a story that the US Department of Justice’s (DOJ) proposed fine of $14 billion was being cut to $5.4 billion.

The German newspaper “Frankfurter Allgemeine Zeitung” reported that John Cryan, CEO of Deutsche Bank, would be in Washington this week for annual IMF and World Bank meetings. Other senior Deutsche Bank executives will be joining him to negotiate a settlement with US authorities. Outfits like the US DOJ like nothing better than to flex their muscles - especially when it comes to dealing with non-US entities. However, the DOJ looks likely to back down when it comes to its proposed $14 billion penalty. After all, it wouldn’t want to be blamed for the destruction of the global banking system.

The FTSE 100 ended the day 84.2 points higher at 6,983.5

The German DAX rose 105.5 points or 1.0% to end the day at 10,511

The US30 closed 54.3 points lower to finish at 18,253.9 The S&P 500 ended down 0.3% at 2,161.2 while the Nasdaq 100 fell 0.2% to close at 4,866.6


The share price of London-listed fund management firm Henderson Group (HGG) soared yesterday. This followed the news that it was part of a “merger of equals” with US-based Janus Capital. The combined group will have $320 billion of assets under management and a market capitalisation of $6 billion. Henderson has a strong presence in the UK and Europe while Janus covers the US and Japan. The merger will bring useful synergies which should help the new group as it adapts to the low interest rate investing environment. Henderson ended the day 16.7% higher at 270.7 pence.

Commodities Update

Crude oil had a relatively quiet start to the week yesterday. Investors caught their breath following last week’s price surge. On Wednesday OPEC committed itself to a production cut which could reduce the cartel’s output to between 32.5 and 33 million barrels per day (bpd). This would represent a reduction of anything between 240,000 and 740,000 bpd when considering that OPEC pumped out around 33.24 million bpd in August. If the production cut goes ahead, this would be the first time that the cartel has reduced output since 2008 during the financial crisis. But OPEC’s announcement was shockingly light on detail. For a start, there’s a very big difference between a daily output cut of 240,000 barrels and one of 740,000 barrels. Then of course OPEC has to decide which countries will be making cuts and by how much. Will Iran, Libya and Nigeria be granted exemptions and will non-OPEC countries like Russia also take part? On top of this how is OPEC going to ensure compliance? All these decisions have been kicked down the road until the next OPEC meeting at the end of November. In the meantime, US shale oil producers must be thrilled by all this. With crude heading back towards $50 they have every incentive to ramp up production. This should make them the biggest beneficiaries of last week’s production cut promise. 

Gold and silver were little-changed in early trade yesterday. However, both lost ground following the latest update on US manufacturing. The ISM Manufacturing PMI for September came in at 51.5 which was a significant improvement from the prior month’s reading of 49.4. It was also better than the 50.4 expected. Last month many analysts were taken by surprise when this key survey fell below 50 for the first time in six months, so indicating contraction in this sector. This was followed by a poor reading for non-manufacturing, which posted its lowest level of expansion in six years. We’ll get the latest update this Wednesday. Yesterday’s bounce-back in manufacturing led to a rally in the US dollar which weighed on precious metals. The improved survey result adds weight to those who believe the Federal Reserve will look to tighten monetary policy at its December meeting. It certainly gives the FOMC less excuse to keep the 0.5% cap on its fed funds rate. If that’s the case then we can expect the dollar to rally further putting more pressure on precious metals

Forex Update

It was a relatively quiet start to the week in FX yesterday. The only significant movement as far the major currencies were concerned was in the British pound. Sterling fell sharply after UK Prime Minister Theresa May announced over the weekend (and ahead of her speech at the Tory party conference) that she would trigger Article 50 before the end of March 2017. Triggering Article 50 will formally start process for the UK to leave the European Union. Investors piled out of sterling as there is now a timetable for the UK’s exit. This means there can be no backtracking and talk of a second referendum is finally dead and buried. On top of this, some of the language coming from the Conservative conference was quite tough, suggesting that the government is preparing to square up to the European Commission (and Council) when it comes to hammering out a deal. In other words, we should prepare for a “hard” rather than “soft” Brexit.

In other news, the US dollar bounced following an improvement in the US ISM Manufacturing PMI. Last month the US manufacturing sector registered contraction for the first time in six months. It was one of the major data releases which led many commentators to doubt that the Fed would hike rates at its September meeting. Yesterday’s release went some way to countering fears that the US economy isn’t as robust as the FOMC would like us to believe. In that respect, it increased the prospect of a rate hike before the year-end. However, we still have the best part of three months to go until the December meeting and that means a stack of important data releases between now and then. This Wednesday we’ll get an update on how the US Non-Manufacturing sector is doing. Then on Friday the latest Non-Farm Payroll data is released.

Upcoming events

There’s very little on the calendar, but today’s significant economic events include the release of Spanish unemployment data, UK Construction PMI and Euro zone PPI. 


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Posted by David Morrison

Category: AM Bulletin

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