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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
PM Bulletin: AUDUSD chart
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

Global stock indices are drifting lower again this morning in lacklustre trade. Crude oil continues to slip with both WTI and Brent hovering around $40 per barrel. There’s a general feeling that the recent equity market rally has gone far enough with many major indices now back to where they started at the end of 2015. Some indices are running into resistance such as the FTSE100 at 6,200, the Dow Jones at 17,600 and the S&P500 around 2,060. With the long Easter weekend coming up, it looks as if some position-squaring is in order. This has been compounded by this week’s comment-torrent from a rash of Fed-heads. We’ve now had four regional Federal Reserve presidents come out in favour of tighter monetary policy with the odds on an April hike shortening dramatically. The dollar has rallied as a result, taking the wind out of the recent commodity rally.

It was a mixed start for global stock indices in early trade yesterday. However, US futures and European equities began to push higher as the session progressed. This was despite the continuation of the dollar rally which has helped to keep a lid on oil prices. But some indices performed better than others. By mid-morning the German Dax had pushed back above 10,000 to record its highest intra-day high since 13th January this year.

But the major indices pulled back from their highs as the US open approached. Federal Reserve Bank of St. Louis President James Bullard appeared on Bloomberg TV and expressed concerns over the Fed’s “Dot Plot” in the way it affected investor behaviour. He said that December’s interest rate projection (which suggested Fed members were in favour of raising rates by 100 basis points over 2016) may have helped trigger the market sell-off at the beginning of the year. He went on to say that there may be a case for the Federal Reserve raising rates in April.

The FTSE 100 index closed at 6,199.1 up 6.4 points on the day, or 0.1%

The German DAX rose 32.9 points or 0.3% to finish at 10,022.9

The US30 closed down 80 points to finish at 17,502.6 The S&P 500 fell 0.6% and closed at 2,036.7 while the Nasdaq 100 fell 0.8% to close at 4,402.6

Equities Update

Shares in William Hill (WMH) slumped yesterday. The bookmaker said that around 400 online gamblers were logging off and turning away from the firm’s site every day. But this wasn’t due to more attractive offerings from rivals in the business such as Ladbrokes (LAD) and Paddy Power Betfair (PPB). Instead William Hill reported that many customers were choosing to take self-imposed “time outs” from gambling under new regulations introduced last October to curb problem gambling. The shares closed at 330 pence down 11%.

Commodities Update

Gold and silver lost ground in early trade yesterday as the US dollar continued to push higher. The move looked like little more than profit-taking as investors reacted to comments from a number of Federal Reserve members. On Tuesday Federal Reserve Bank of Chicago President Charles Evans and Philly Fed President Patrick Harker added to comments from San Francisco Federal Reserve President John Williams and Atlanta Federal Reserve President Dennis Lockhart the previous day. All echoed each other in suggesting the FOMC may consider raising rates as early as next month, rather than waiting for June. None of these Fed members are currently on the FOMC. However, they all contributed to the Fed’s “Dot Plot” which saw Fed members dial down their expectations for rate hikes in 2016 to 50 basis points from 100. This being the case, why have four prominent Fed members decided to agitate for tightening now? To my mind this is further evidence that the US central bank is losing control of the situation. Either they are deliberately trying to confuse the market, or they have no idea what direction monetary policy should now go in. They are most certainly incompetent. After all, they repeatedly insist that the timing of future rate moves is data-dependant. Yet they hiked in December as Manufacturing PMIs fell, and held back from raising further even as employment and inflation have hit their targets.

Later on Federal Reserve Bank of St. Louis President and FOMC-voting member James Bullard also suggested that the Fed could hike rates next month. The news helped to lift the dollar further and precious metals slumped. The “flash crash” in silver was covered in yesterday’s afternoon report.

Crude oil came under further selling pressure yesterday. It had ended lower on Tuesday after the American Petroleum Institute (API) reported a pick-up in US inventories. The report contradicted Genscape’s update on oil stocks the previous day when the market intelligence provider reported a modest decline in oil stocks at Cushing, Oklahoma. But it was yesterday’s Energy Information Administration (EIA) report which proved decisive. This showed a jump in inventories of 9.4 million barrels for the week ending 18th March. This was well above market expectations of a 2.5 million barrel build.

The continued pick-up in the US dollar has also weighed on the oil price, persuading traders to cut exposure and book profits ahead of the long holiday weekend. Crude has enjoyed a strong rally off its lows – helped in no small measure by ongoing speculation of a production freeze being agreed by many OPEC and non-OPEC producers. However, the International Energy Agency (IEA – not to be confused with the EIA) pointed out that freezing output at January’s levels is “meaningless.” The head of the IEA’s oil industry and markets division noted that Saudi Arabia is the only country participating in the proposed meeting with the ability to increase production. Iran and Libya have so far made it clear they will not be attending the 17th April meeting in Qatar.

Forex Update

The US dollar made further gains yesterday, and is trading at its best levels in around a week. The rally in the greenback began at the end of last week as investors absorbed the latest statement and economic projections from the Fed’s FOMC. The dollar initially fell after the Federal Reserve dialled back on its prediction of 100-basis points-worth of rate hikes in 2016. But since then some profit-taking crept in and this accelerated this week as a bunch of regional Federal Reserve presidents expressed the view that rates could be hiked as early as next month.

Despite this the greenback has been trending lower since early December. Back then the euro got a lift after the ECB came up short on stimulus expectations at its last meeting of 2015. The central bank remedied the situation a few weeks ago when it unleashed a bucket-load of additional monetary stimulus for the Euro zone. However, any euro-negative effects that this may have had were negated after ECB President Draghi suggested that the central bank had reached the limits of monetary stimulus. So the current situation remains opaque. There is a definite technical trend for a weaker dollar, yet divergent central bank monetary policy suggests the greenback should be strengthening against all the majors.

Meanwhile the British pound continues to slip back against both the US dollar and euro. Yesterday ICM updated its referendum tracker which showed a 2% lead for referendum voters in favour of leaving the EU.

Upcoming events

Today’s significant economic events include the release of the latest ECB Economic Bulletin, UK Retail Sales, UK Mortgage Approvals and details of the ECB’s Targeted LTRO. From the US we have Durable Goods, Weekly Jobless Claims and Flash services PMI. Federal Reserve Bank of St. Louis President James Bullard will also be speaking, again.

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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