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Weekly Bulletin: Equity rally continues
29 Feb 2016
PM Bulletin: Chart for the EURUSD
29 Feb 2016
AM Bulletin: Auction postponement linked to risk rally
26 Feb 2016
PM Bulletin: FOMC members add to confusion over monetary policy
26 Feb 2016
AM Bulletin: US stock indices rebound
25 Feb 2016
PM Bulletin: Lloyds Banking Group
25 Feb 2016
AM Bulletin: Stocks slip on lower crude
24 Feb 2016
PM Bulletin: Gold
24 Feb 2016
PM Bulletin: Crude oil, yen and equities
23 Feb 2016
AM Bulletin: Equities slip after strong start to week
23 Feb 2016
Sterling dumps on Brexit fears
22 Feb 2016
AM Bulletin: Stronger start for global equities
22 Feb 2016
AM Bulletin: Netflix leads Nasdaq lower
19 Feb 2016
PM Bulletin: FTSE revisited
18 Feb 2016
AM Bulletin: Oil still leading equities
18 Feb 2016
PM Bulletin: The yen, Nikkei and negative interest rates
17 Feb 2016
AM Bulletin: Oil and FOMC minutes in focus
17 Feb 2016
PM Bulletin: WTI and Brent
16 Feb 2016
AM Bulletin: Equities, USD, oil rally while precious metals slide
16 Feb 2016
Weekly Bulletin: Yellen keeps us guessing
15 Feb 2016
PM Bulletin: A multi-year look at the FTSE100
15 Feb 2016
PM Bulletin: Andrews’ Pitchfork on S&P500
12 Feb 2016
AM Bulletin: Equities remain vulnerable to further selling
12 Feb 2016
PM Bulletin: EURUSD – what now?
11 Feb 2016
AM Bulletin: Yellen fails to calm nerves
11 Feb 2016
PM Bulletin: Yellen steers through Clashing Rocks
10 Feb 2016
AM Bulletin: Yellen testimony in focus
10 Feb 2016
PM Bulletin: Japanese sell-off spooks investors
09 Feb 2016
AM Bulletin: Investors nervous as crude flirts with $30
09 Feb 2016
PM Bulletin: Big “risk-off” moves to start the week
08 Feb 2016
Weekly Bulletin: Investor jitters raises volatility
08 Feb 2016
February: Non Farm Payrolls Out Today
05 Feb 2016
PM Bulletin: Big miss for Non-Farm Payrolls
05 Feb 2016
AM Bulletin: Non-Farm Friday
05 Feb 2016
PM Bulletin: Non-Farm Payroll look-ahead
04 Feb 2016
AM Bulletin: Dollar slumps; oil spikes
04 Feb 2016
PM Bulletin: Tomorrow’s MPC press conference in focus
03 Feb 2016
AM Bulletin: Weaker crude weighs on equities
03 Feb 2016
PM Bulletin: A look at the EURUSD
02 Feb 2016
AM Bulletin: Google can’t lift indices
02 Feb 2016
PM Bulletin: Charts for USDJPY
01 Feb 2016
Weekly Bulletin: Central banks respond to sell-off
01 Feb 2016
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 Friday 19 February 2016

AM Bulletin: Netflix leads Nasdaq lower

 

 

Indices Update

Last night US stock indices gave up early gains to close lower. The Nasdaq100 was the main casualty ending down 1.1%, while Netflix fell 4% on the day. European equities and US stock index futures were mixed in early trade this morning.

Yet despite the recent weaker tone, this is turning out to be a terrible week for stock market bears, but is no doubt offering significant relief for the bulls out there. The Dow jones Industrial Average has tacked on over 1,000 points from last Friday’s low to yesterday’s high, which counts as a hefty short squeeze in anyone’s book.

The dull old correlation of “oil up, so equities up” continues to hold true. Yesterday, just about every stock index gyration could be traced back to a change of a few cents in the price of a barrel of crude. This makes a certain amount of sense given the pain that low oil prices are inflicting on oil exporting countries, which, after a long hiatus, now includes the USA.

The problem is that all these years of stimulus and ultra-low interest rates have led to a search for yield from investors in higher-risk investments. Money was chucked into US shale oil and related ventures. This was fine when crude was trading over $100 per barrel, but not so clever when it hit $30.

It feels as if the whole financial edifice will only truly be happy once the oil price has doubled from current levels. What a ridiculous situation we find ourselves in.

The FTSE 100 index closed at 5,972, down 58.4 points on the day, or around 1.0%

The German DAX rose 86.4 points or 0.9% to finish at 9,463.6

The US30 closed down 40.4 points to finish at 16,413.4 The S&P 500 ended at 1,917.8 down 9 while the Nasdaq 100 fell 1.1% to close at 4,151.5

Equities Update

The FTSE100 index lost ground yesterday thanks to a significant retreat in a number of major names and across a number of different sectors. Anglo American (AAL) gave back 7.7% of Wednesday’s 17% rally to close at 432 pence. Rio Tinto (RIO) was another major casualty from the mining sector as it shed 3.2% to close at 1,888.5 pence. Banks also featured in the losers’ list: Standard Chartered (STAN) fell 5.5%, Barclays shed 3.8% and Royal Bank of Scotland ended 2.1% lower. But the pharmaceutical sector also came under fire with AstraZeneca (AZN) and GlaxoSmithKline (GSK) down 3.5% and 3.1% respectively.

Commodities Update

Crude was higher in early trade on Thursday, building on gains from earlier in the week. Both WTI and Brent had benefited from the agreement between Russia, Saudi Arabia, Venezuela and Qatar to implement a production “ceiling.” Crude got a bigger boost on Wednesday after Iranian Oil Minister Bijan Zanganeh said this represented the first step toward stabilizing the market. This was something of a departure from Iran’s previous musings on the when it branded the production ceiling “illogical.”

But oil began to give back gains as the session progressed and the latest inventory data from the Energy Information Administration (EIA). This showed an increase of 2.1 million barrels for the week ending 12 February 2016. This was a touch below the consensus expectation of a 3.2 million barrel build. However, numbers from the API the day previously had indicated a significant decline in inventories. Consequently, the market “whisper” was also for a fall. That proved to be wrong so crude sold off. As is so often the case, hard data trumps rumour and jawboning. So while crude has had a good run and producers can pat themselves on their collective backs, nothing has changed with regard to slowing demand growth and over-supply.

Thursday brought another session of consolidation for gold and silver. Both continued to hold around significant support levels. The price action in gold was particularly encouraging for the bulls as the metal managed to trade above $1,200 for all of the session. As the European close approached, both precious metals shot higher. There was no obvious catalyst for the move, other than a dip in crude.

Despite this, it may still be too early to consider this a major support level. However, a look at the daily chart shows that the area around here acted as resistance through March and April last year. The most significant support level for gold comes in around $1,180 although the bulls will be hoping this isn’t retested anytime soon.

Forex Update

The major currency pairs were mixed in early trade yesterday and it was difficult to discern any distinct overall trading theme. However, by mid-morning it was apparent that the yen was once again the target for buyers. It was difficult to pinpoint a precise reason for the move. However, it could have been a delayed reaction to Japanese Prime Minister Abe’s comments on Wednesday which appeared to rule out further fiscal stimulus. This puts the onus back on the Bank of Japan (who meet on 14th/15th March) to come up with additional monetary measures. However, any additional central bank intervention could be viewed as desperation on the BOJ’s part, given that they’ve only just implemented negative deposit rates. Otherwise, the stronger yen could be seen as foreshadowing a nasty sell-off in US tech stocks. The Nasdaq100 ended over 1% lower on the day.

The dollar and euro ebbed and flowed throughout the session, although the dollar got the upper hand later in the US session.

Upcoming events

Today’s significant data releases include UK Retail Sales and Public Sector Net Borrowing. WE have CPI data from the US and Canada, while FOMC-voting member Loretta Mester is scheduled to speak at 13:00 GMT.

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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