Incisive market commentary from David Morrison

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AM Bulletin: Markets rise for the second day ; back to pre-referendum levels, sterling still weak
30 Jun 2016
AM Bulletin: Confidence returns – but for how long?
29 Jun 2016
AM Bulletin: The onslaught continues – and we’re not just talking the football
28 Jun 2016
Weekly Bulletin: Investors rattled by Brexit vote
27 Jun 2016
PM Bulletin: Brexit - Referendum fallout
24 Jun 2016
AM Bulletin: We’re out! And so is Cameron
24 Jun 2016
Video Update: #AskSpreadCo - EU referendum
23 Jun 2016
AM Bulletin: Markets on tenterhooks ahead of UK vote
23 Jun 2016
Spread Betting Tips
22 Jun 2016
AM Bulletin: Risk assets waft higher
22 Jun 2016
PM Bulletin:Referendum and Market Reaction
21 Jun 2016
PM Bulletin: Gold and the referendum
21 Jun 2016
AM Bulletin: Yellen testimony in focus
21 Jun 2016
PM Bulletin: Janet Yellen’s testimony
20 Jun 2016
Weekly Bulletin: It’s all about the referendum
20 Jun 2016
Market Info Update: EU Referendum Margin Changes - CFDs
17 Jun 2016
Market Info Update: EU Referendum Margin Changes - Spread Betting
17 Jun 2016
PM Bulletin: Forecasting the referendum result
17 Jun 2016
AM Bulletin: Central banks leave rates unchanged
17 Jun 2016
PM Bulletin: FOMC post-mortem
16 Jun 2016
AM Bulletin: Yen, precious metals soar post FOMC/BOJ
16 Jun 2016
PM Bulletin: FOMC look-ahead
15 Jun 2016
AM Bulletin: FOMC meeting ahead
15 Jun 2016
PM Bulletin: European equities slide
14 Jun 2016
AM Bulletin: Stocks down on oil, growth fears and UK referendum
14 Jun 2016
Weekly Bulletin: FOMC and BOJ meetings in focus
13 Jun 2016
PM Bulletin: Markets rattled by slide in bond yields
10 Jun 2016
AM Bulletin: European stock indices drift lower
10 Jun 2016
PM Bulletin: WTI at $50 – thoughts on US production
09 Jun 2016
AM Bulletin: Precious metals soar
09 Jun 2016
PM Bulletin: S&P closes in on all-time high
08 Jun 2016
AM Bulletin: Investors in limbo ahead of Fed and UK vote
08 Jun 2016
PM Bulletin: Yellen and the jobs data
07 Jun 2016
PM Bulletin: Fresh polls send sterling lower
06 Jun 2016
Weekly Bulletin: Rate hike? What rate hike?
06 Jun 2016
PM Bulletin: A dismal Non-Farm Payroll number
03 Jun 2016
AM Bulletin: Non-Farm Payroll Friday
03 Jun 2016
PM Bulletin: Non-Farm Payrolls look-ahead
02 Jun 2016
AM Bulletin: OPEC, ECB, key data releases and central bank speakers
02 Jun 2016
PM Bulletin: OPEC and the oil price
01 Jun 2016
AM Bulletin: Manufacturing PMIs in focus
01 Jun 2016
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Indices Update

The FTSE 100 slid 2.6% to 5982 by close wiping off a total of GBP100 billion across the index in last two trading sessions. The carnage, however, did not stop there - the FTSE 250 lost 7%, over 1100 points, in Monday’s trading session;  a total drop of 14.2% since Friday. The UK’s counter parts in the now distant European continent felt a modest rebound on open, but were soon dragged down in sympathy and on uncertainty.

Early on in the trading session George Osborne made attempts to sooth the market; insisting that the UK economy is in a strong position and reiterated the Premier’s comments concerning Article 50 – that it need not be triggered until the autumn. In addition, Angela Merkel ruled out any informal talks with the UK unless Article 50 is officially triggered. However, to put all traders’ minds at rest Boris Johnson offered comforting words that the ‘markets are stable’ – the comment arrived as RBS and Barclays were suspended due to their massive drop in price.

Throughout the trading session, analysts warned that the UK may enter a recession as earlier as the second half of the year, some suggested towards the end of the year. These comments arrived in parallel with comments that the market was pricing in a rate cut - giving a 50% chance of an interest rate cut in July, a 65% chance of a cut by August, and an 80% chance of a cut by the end of the year.

Without any surprise Wall Street opened lower; the Dow and S&P 500 their broke 200 day MA intraday and this held below the close. The Dow during its session was down 337 but eventually closed down 260 points. The S&P 500 found some resistance at 2001, down 1.81%.

After the close of the UK’s trading session, ratings agencies S&P and Fitch downgraded the UK to AA from AAA.  A rating downgrade can affect how much it costs governments to borrow money in the international financial markets.


Unsurprisingly there were a number of serious casualties across the market; Easyjet warned that the Brexit decision will hit sales – loosing 24% on the day. Equally, Foxtons took a beating of 25% - suggesting that the outcome will depress the London property market.

Banking stocks continued to take a real thumping; Barclays fell more than 17% and RBS plummeted 26%, both banks had their trading halted.  Lloyds fell 10 percent by 4pm, while challenger banks Virgin Money, OneSavings Bank Plc and Shawbrook Group all plunged more than 25 percent.

Commodities Update

Gold continued to extend its gains as investors took advantage of its ‘safe-haven’ status. Goldman Sachs upped their forecast to $1300 on Friday, this was in the rear view mirror come Monday lunchtime.  SocGen and HSBC raised their forecasts to $1400. Holdings in exchange-traded funds backed by bullion soared $4.3 billion after the vote, the strongest gain in four years.

Crude dropped almost 3%, Brent hit seven week lows due to Brexit concerns and a strengthening dollar. Both have lost almost 8% since the outcome of the vote. However, the oil has found some support in the shape of a looming strike in Norway – the affected fields account for 18% of Norway’s output. The strike isn’t enough to see oil rebound, but it has provided a floor to the price.  

Forex Update

The pound found some comfort in the Chancellor’s comments yesterday morning, inching up to 1.3472 versus the dollar. However, this moment of comfort was short lived as Goldman Sachs and Bank of America slashed their near term forecasts. By midday, GBPUSD traded at 1.3224 but shortly after fell to a 31 year low of 1.3151. At the same time sterling fell below 1.20 versus the Euro for the first time in 2 years. 

Legendary investor George Soros made a statement that he did not bet against the pound, but rather took a long position as he was a supporter of the ‘remain’ camp. In the days running up to the vote he predicted that GBPUSD could fall to as low as 1.15.

Overnight, the pound strengthened against both USD and EUR, now trading above 1.33. 

Upcoming events

09:00 EUR ECB President Draghi Speaks in Sintra, Portugal

09:00 EUR EU Parliament to Vote on Resolution on U.K. Referendum

10:00 GBP BOE Holds Third Additional ITLR Operation Around EU Referendum

13:30 USD Gross Domestic Product (Annualized) (1Q T)

15:00 USD Consumer Confidence (JUN) 


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Posted by David Morrison

Category: AM Bulletin

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