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AM Bulletin: Equities and oil slip in early trade
31 Mar 2016
PM Bulletin: Non-Farm Payroll look-ahead
31 Mar 2016
AM Bulletin: Yellen comments boost risk appetite
30 Mar 2016
PM Bulletin: Is a dovish Janet really that bullish?
30 Mar 2016
AM Bulletin: Yellen to speak
29 Mar 2016
PM Bulletin: US indices running into resistance
29 Mar 2016
AM Bulletin: Profit-taking ahead of holiday weekend
24 Mar 2016
PM Bulletin: Dollar correlations
24 Mar 2016
AM Bulletin: Equities head higher
23 Mar 2016
PM Bulletin: Melt-down in precious metals
23 Mar 2016
AM Bulletin: Markets looking for guidance
22 Mar 2016
Weekly Bulletin: US dollar on the back foot
21 Mar 2016
AM Bulletin: USD sell-off boosts oil
18 Mar 2016
PM Bulletin: A look at the S&P500 and FTSE100
18 Mar 2016
AM Bulletin: USD down on dovish Fed
17 Mar 2016
PM Bulletin: USDJPY
17 Mar 2016
AM Bulletin: All ears and eyes on FOMC
16 Mar 2016
PM Bulletin: Reaction to the “Sugar Tax”
16 Mar 2016
AM Bulletin: BOJ unchanged
15 Mar 2016
PM Bulletin: FOMC look-ahead and the USD
15 Mar 2016
Weekly Bulletin: Central banks still in focus
14 Mar 2016
PM Bulletin: Gold
14 Mar 2016
AM Bulletin: Confusion reins
11 Mar 2016
PM Bulletin: EURUSD revisited
11 Mar 2016
AM Bulletin: ECB meeting in focus
10 Mar 2016
PM Bulletin: Mr Draghi fires his bazooka
10 Mar 2016
AM Bulletin: Markets consolidate
09 Mar 2016
PM Bulletin: ECB look-ahead
09 Mar 2016
AM Bulletin: Chinese data weighs on equities
08 Mar 2016
PM Bulletin: Nasdaq 100
08 Mar 2016
Weekly Bulletin: ECB expected to boost stimulus
07 Mar 2016
PM Bulletin: FTSE making steady gains
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
PM Bulletin: Non-Farm Payroll look-ahead
03 Mar 2016
AM Bulletin: Equities soar
02 Mar 2016
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02 Mar 2016
AM Bulletin: See-saw day ends in losses for US equities
01 Mar 2016
PM Bulletin: Glencore
01 Mar 2016
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Indices Update

European equities and US stock index futures were weaker in pre-market trade but began to tick higher as the trading day progressed. Once again, their progress mirrored that of crude oil which made back early losses as investor risk appetite increased.

Market sentiment is broadly positive. The Dow and S&P are now both up for the year to date for the first time. However, the Nasdaq100, FTSE100, German Dax, French CAC and Spanish IBEX are all nursing modest losses while the Italian MIB and Japanese Nikkei have fallen behind the other major indices to some extent.

Equity markets have been getting a boost from additional ECB stimulus, the promise of further easing from the BOJ and PBOC together with last week’s unexpected dovish outlook from the US Federal Reserve. The latter has helped to push the dollar lower, and this in turn has boosted dollar-denominated commodities (particularly oil) and raised hopes of improved earnings from US multinationals.

Nevertheless, there are concerns that the positive effects of loose monetary policy may be coming to an end. That’s not to say that equities can’t rally further, but to wonder if the upside may be capped. With all the big quarterly central bank meetings now behind us, market participants are now looking for guidance in terms of where risk assets are heading next. We can expect investors to react to the dollar, the price of crude and economic data releases.

The FTSE 100 index closed at 6,184.6 down 5.1 points on the day, or 0.1%

The German DAX fell 2.2 points to finish effectively unchanged at 9,948.6

The US30 closed up 21.6 points to finish at 17,623.9 The S&P 500 rose 0.1% and closed at 2,051.6 while the Nasdaq 100 ended the day up 0.4% at 4,427

Equities Update

Sainsbury's (SBRY), the UK's second biggest supermarket chain, rose in early trade yesterday. This followed the news that it has been given a clear run to buy Home Retail Group (HOME) for £1.4 billion. The announcement came through after the market closed last Friday. South Africa’s Steinhoff International (Sainsbury's takeover rival) pulled out of the race. Home Retail ended the day 1.2% higher at 165.1 pence. Sainsbury’s also closed 1.2% higher at 276.5 pence.

Commodities Update

Oil was weaker in early trade yesterday, but it made back most of its losses by mid-morning. It was a relatively quiet session for crude with both Brent and WTI trading in narrow ranges with both contracts holding above $40 per barrel.

Investors are looking ahead to the proposed meeting on 17th April which will be attended by a number of OPEC and non-OPEC producers. The gathering has been arranged to discuss freezing output at January levels. Although this will do little to address the ongoing supply glut, some analysts believe that it may prove to be a precursor to future production cuts. This has helped to lift the oil price off the lows seen earlier this year.

Crude has lost some of its recent upside momentum and we now have to wait a month until we hear if the meeting produces any meaningful agreement. It will be sometime later before we will know if OPEC and non-OPEC members then actually deliver on any promises. In the meantime, oil looks likely to fluctuate on the back of the US dollar and inventory data. Last week’s Federal Reserve meeting helped to push the dollar lower and oil higher. We’ll see if this dynamic holds through this shortened trading week.

Gold lost more ground yesterday as traders cashed in on last week’s post-FOMC bounce. Yet despite the sell-off, gold spent the whole session above support which comes in around $1,240. Meanwhile, silver managed to eke out a modest gain and support here seems to be holding around $15.70. This was despite a small rally bin the US dollar which normally would weigh on the price.

Gold and silver soared higher following the release of the Fed’s statement and latest economic projections. The FOMC is now predicting a rate increase of 50 basis points throughout 2016, down from the 100 basis points suggested back at their December meeting. Precious metals gain in attractiveness as an asset class when interest rates are low as investors don’t have to worry so much about lost opportunity costs of holding yield-bearing instruments when returns are meagre. Gold and silver are also sought out as safe-havens. This factor came to the forefront on Wednesday as the Fed expressed concerns about future financial market volatility and the outlook for global growth. Gold and silver also got a boost from the sharp sell-off in the US dollar.

Forex Update

Yesterday’s FX session was relatively subdued as we began the holiday-shortened week. The US dollar was a touch firmer for most of the day, carrying on the re-positioning and profit-taking after the greenback’s slump last week. On Wednesday the dollar fell sharply after the US Federal Reserve’s rate decision, statement and summary of economic projections. The Fed’s FOMC was considerably more dovish than anticipated as the committee expressed concerns about future financial market volatility and the outlook for global growth. Members also reined in their expectations for future rate rises. The consensus view has coalesced around prospective rate hikes totalling 50 basis points in 2016, down from the 100 basis points-worth of increases predicted at the December meeting.

Sterling suffered the biggest moves amongst the currencies yesterday. The British pound fell sharply after the UK Government was embarrassed by the resignation of Ian Duncan Smith from the cabinet. His resignation and the accompanying letter were seen as extremely damaging to Chancellor George Osborne and by extension, David Cameron. Divisions within the Conservative party over whether the UK should remain within the EU or leave have widened considerably over the last two weeks, and the arguments more rancorous. As a prominent Eurosceptic Mr Duncan Smith’s departure has further added to the unpleasantness as Tory MPs line up to support or rubbish him.

Upcoming events

Today’s significant data releases include Flash Manufacturing PMIs and Flash Services PMIs from Germany, France and the euro zone. We also have the German Ifo Business Climate and German ZEW Economic Sentiment. From the UK we have CPI, RPI and Public Sector Net Borrowing. From the US we have the Flash Manufacturing PMI and Richmond Manufacturing Index.

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

Category: AM Bulletin


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