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PM Bulletin: Gold
29 Jan 2016
AM Bulletin: BOJ takes rate negative
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PM Bulletin: BOJ in focus
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AM Bulletin: FOMC disappoints, but earnings offer support
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PM Bulletin: Facebook reports after the close
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AM Bulletin: Crude still driving equities
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PM Bulletin: Tomorrow’s FOMC meeting
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AM Bulletin: Equities slide on crude sell-off
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PM Bulletin: Silver chart
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Weekly Bulletin: Promise of further stimulus halts equity slide
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PM Bulletin: EURUSD chart
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AM Bulletin: Equities rally on ECB and oil
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PM Bulletin: Dovish Draghi triggers euro sell-off
21 Jan 2016
AM Bulletin: ECB meeting in focus
21 Jan 2016
PM Bulletin: Crude makes fresh multi-year lows
20 Jan 2016
AM Bulletin: Stocks slide as oil slumps
20 Jan 2016
PM Bulletin: Bank of Canada rate decision
19 Jan 2016
AM Bulletin: Equities surge on relief rally
19 Jan 2016
PM Bulletin: Crude oil - long-term charts
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Weekly Bulletin: China and oil weigh on equities
18 Jan 2016
PM Bulletin: Long-term gold bullion chart
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AM Bulletin: More woe from China
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Holiday Schedule: Martin Luther King Day Monday 18th January 2016
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PM Bulletin: Equities: bull or bear?
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AM Bulletin: Investors remain jittery
14 Jan 2016
PM Bulletin: The Bank’s rate decision
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AM Bulletin: Oil rebound lifts stocks
13 Jan 2016
PM Bulletin: Saudi Aramco’s IPO
12 Jan 2016
AM Bulletin: Crude closes in on $30
12 Jan 2016
PM Bulletin: US Fourth Quarter Earnings Season
11 Jan 2016
Weekly Bulletin: 2016: Trouble ahead?
11 Jan 2016
January: Non Farm Payrolls Out Today
08 Jan 2016
PM Bulletin: Another blow-out payroll number
08 Jan 2016
AM Bulletin: China effect calms markets
08 Jan 2016
PM Bulletin: Non-Farm Payroll look-ahead
07 Jan 2016
AM Bulletin: Equities slump after 2nd China trading halt
07 Jan 2016
AM Bulletin: Investors remain jittery
06 Jan 2016
AM Bulletin: China steadies and Europe rallies
05 Jan 2016
AM Bulletin: Chinese equities plunge
04 Jan 2016
 
 
 Wednesday 20 January 2016

AM Bulletin: Stocks slide as oil slumps

 

 

Indices Update

European equities and US stock index futures are in retreat again this morning. Last night Wall Street gave up most of the substantial gains made earlier in the day as an encouraging rally in oil reversed sharply. Overnight Asian Pacific markets tumbled led by the Japanese Nikkei and Hang Seng indices which both ended close to 4% lower. China’s Shanghai Composite ended 1% lower. Its losses were tempered by the expectation of further stimulus measures from the authorities.

Equities rallied sharply on Tuesday. The triggers were a rebound in oil prices and a jump in Chinese stocks which took the Shanghai Composite back above 3,000. The rally in China came despite the release of some lacklustre data. GDP for 2015 came in at 6.9% as expected – the lowest GDP reading for twenty five years. In addition, Industrial Production, Fixed Asset Investment and Retail Sales all undershot their respective consensus expectations, and were down from the prior month’s readings. However, the People’s Bank of China (PBOC) said that it would inject around 600 billion yuan ($91 billion) into the banking system ahead of the Lunar New Year in early February. This liquidity boost should help to dampen volatility ahead of the long Chinese holiday.

The FTSE 100 index closed at 5,876.8 up 96.9 points (1.7%) on the day

The German DAX rose 142.4 points or 1.5% to finish at 9,664.2

The US30 closed up 27.9 points to finish at 16,016 The S&P 500 ended at 1,881.3 up 1 point while the Nasdaq 100 rose 0.1% to close at 4,147.1

Equities Update

Online grocer Ocado (OCDO) rose sharply yesterday. This followed speculation that Amazon (AMZN) was considering making a bid for the FTSE250 company. Online financial news site thisismoney.co.uk reported that Amazon is keen to set up a grocery delivery service in the UK. The giant online retailer believes that acquiring an operation such as Ocado would be cheaper than building its own operation from scratch. Shares in Ocado were up around 18% by mid-morning but fell back as the session progressed. They closed out at 259.1 pence, 6.9% higher.

Ocado had a troublesome IPO. After a few false starts it finally floated at 180 pence per share in July 2010. This was a long way short of its proposed 200-270 price target. Then on its first day trading the stock fell below 165 pence.

Commodities Update

Crude oil stormed higher yesterday morning despite the release of disappointing economic data from China. But news that the PBOC would inject liquidity into the banking system ahead of the Lunar New Year in early February led to a sharp rally in the Shanghai Composite.

Oil’s bounce came despite a warning from the International Energy Agency that crude could have further to fall as supply continues to outpace demand. But after a substantial move higher which heled to lift European stock markets, buyers cashed out and booked profits. Crude reversed direction and sold off sharply to end the day lower, with WTI registering an 8.5% high-low swing.

Gold was firmer in early European trade but had drifted lower by mid-morning. However, it managed to hold above $1,080 despite the US dollar making further headway against the euro. Meanwhile silver spent the morning in positive territory and held above $14 per ounce for most of the session. Silver was helped by a rise in copper and other industrial metals. These got a lift following the release of China’s GDP number and the other disappointing data releases. The economic data together with news that the PBOC will inject liquidity into the banking system have raised hopes of additional monetary stimulus from China’s authorities.

The two precious metals have added to their gains this morning. There is evidence of some safe-haven buying creeping in now as silver has held up despite a sell-off in base metals. Dollar weakness has also helped.

Forex Update

It was a day of mixed fortunes in yesterday’s FX markets. The big movers were the commodity currencies. The Canadian dollar and Norwegian krone rallied sharply thanks to the bounce-back in crude oil. Meanwhile, the Australian dollar shot higher as China’s Shanghai Composite retook the 3,000 level. Although data for China’s GDP, Industrial Production, Retail Sales and Fixed Asset Investment were disappointing, there was widespread relief that the People’s Bank of China (PBOC) left the yuan effectively unchanged. The current worry for investors is that the PBOC pushes the yuan lower against the dollar in its daily fixes and effectively exports deflation to the rest of the world.

The other big theme was the recovery in investor risk appetite. This had investors selling (borrowing) ultra-low yielding currencies such as the Japanese yen and Swiss franc and whacking the proceeds into higher-yielding (and higher risk) assets such as global equities.

Sterling shot higher following the release of UK inflation data. This showed a small rise in CPI to 0.2% year-on-year from 0.1% last month. Core CPI (excluding food and energy) rose to 1.4% annually from 1.2%. But the British pound soon gave up its gains as Mark Carney delivered a speech at the Peston lecture in London. The Bank of England governor played down expectations of a rate hike and warned of more weakness to come from China. Sterling hit its lowest level against the US dollar in close to seven years.

Upcoming events

Today’s significant economic events include UK Claimant Count Change, Unemployment Rate and Average Earnings. From the US we have CPI, Building Permits, Housing Starts and Crude Oil Inventories. The Bank of Canada will release its rate decision, monetary policy report and rate Statement. It is expected to cut its headline Overnight Rate to 0.25% from 0.5%

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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