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PM Bulletin: BOJ and the yen
31 May 2016
AM Bulletin: Quiet start following holiday weekend
31 May 2016
PM Bulletin: Meanwhile in China
27 May 2016
AM Bulletin: Yellen in focus ahead of holiday weekend
27 May 2016
PM Bulletin: FTSE breaks above 6,200 again
26 May 2016
Holiday Schedule: Memorial Day 30th May 2016
26 May 2016
AM Bulletin: Brent crude tops $50
26 May 2016
PM Bulletin : Crude Chart
25 May 2016
AM Bulletin: “Risk-on” trade continues
25 May 2016
PM Bulletin: Another poll boost for sterling
24 May 2016
AM Bulletin: Equities slip as rate hike worries persist
24 May 2016
PM Bulletin: Changing expectations
23 May 2016
Weekly Bulletin: I’ll see your hike and raise you two
23 May 2016
PM Bulletin : Significant events ahead of June FOMC
20 May 2016
AM Bulletin: Preparing for a summer rate hike
20 May 2016
PM Bulletin : Gold struggles as dollar strengthens
19 May 2016
AM Bulletin: FOMC more hawkish than anticipated
19 May 2016
PM Bulletin : FOMC minutes and the S&P
18 May 2016
AM Bulletin: FOMC minutes in focus
18 May 2016
PM Bulletin: Cable rallies on latest poll
17 May 2016
AM Bulletin: US equities lead bounce-back
17 May 2016
Weekly Bulletin : Waiting on Central Banks
13 May 2016
PM Bulletin : Apple
13 May 2016
Holiday Schedule Whit Monday Market Holiday
13 May 2016
AM Bulletin : US Retail Sales in focus
13 May 2016
PM Bulletin : Silver and Gold
12 May 2016
AM Bulletin: Investors wary after Wall Street sell-off
12 May 2016
PM Bulletin: Two headaches for Elon Musk
11 May 2016
AM Bulletin: Stock indices pull back after rally
11 May 2016
PM Bulletin: Yen pulls back on jawboning
10 May 2016
AM Bulletin: Markets steady on commodity bounce
10 May 2016
PM Bulletin: Precious metals give back recent gains
09 May 2016
Weekly Bulletin: Poor Non-Farm Payroll causes concern
09 May 2016
May: Non Farm Payrolls Out Today
06 May 2016
PM Bulletin: A dismal Non-Farm Payroll number
06 May 2016
AM Bulletin: Non-Farm Payrolls in focus
06 May 2016
PM Bulletin: Non-Farm Payroll look-ahead
05 May 2016
AM Bulletin: Crude bounce lifts equities
05 May 2016
PM Bulletin: Apple update
04 May 2016
AM Bulletin: Equities under pressure
04 May 2016
PM Bulletin: Aussie dollar slumps
03 May 2016
AM Bulletin: RBA cuts by 25 basis points
03 May 2016
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Indices Update
European equities have flown higher this morning, responding to yesterday’s rally on Wall Street. Once again, crude oil’s strength is underpinning stocks while the weaker yen is also a factor in the “risk-on” trade. 
US equities ended sharply higher yesterday. The major US indices made back their losses from Friday, shrugging off a clutch of weak data releases. Apple (AAPL) was the stand-out performer on the day. The stock ended the day 3.7% higher, helped by the news that Warren Buffett’s Berkshire Hathaway has taken a new stake in the company. This follows on from recent reports that other high-profile fund managers such as Carl Icahn and David Tepper have dumped their shares in Apple. 
The Empire State Manufacturing Index fell 9.0. This was well below the 7.2 expected and the prior reading of 9.6. On Saturday Chinese Industrial Production, Retail Sales and Fixed Asset Investment all came in lower than expected, and were down from their readings the month before. Usually mining stocks would suffer on any evidence of a slowdown in China. However, the sector was strong yesterday. Once again, it looks as if investors expect authorities there to counter the slew of recent poor data releases with additional stimulus. This may be forthcoming as the alternative to doing nothing looks likely to result in a loss in confidence in Chinese assets and a flight out of the yuan. However, China has already engaged in an unprecedented credit binge in the first quarter of this year.
On Friday US and European stock indices flew higher initially following the release of a much better-than-expected US Retail Sales number. However, US markets reversed direction later in the day and ended sharply lower. That meant that those European indices not closed yesterday in observance of Whit Monday struggled initially. However, they recovered as US equities bounced, helped by stronger oil prices and a pull-back in the Japanese yen.
The FTSE 100 index closed at 6,151.4 up 12.9 points on the day, or +0.2%
  
The German DAX was closed in observance of Whit Monday
   
The US30 closed up 175.4 points to finish at 17,710.7. The S&P 500 rose 20.1 to close at 2,066.7 while the Nasdaq 100 gained 1.3% to close at 4,380.5
  
Equities
 
Mining stocks and oil explorers/producers did well yesterday. Premier Oil (PMO) ended the day 7.3% firmer at 77.5 pence while Tullow Oil (TLW) was up around 5% at 260.9 pence. The resilient oil price has helped companies I this sector recover strongly this year. But yesterday’s standout performer in the FTSE100 was Lonmin (LMI). Shares in the platinum producer Lonmin were up over 15% in morning trading after the company announced its losses had shrunk thanks to cost-cutting, despite the global slump in metals prices. The stock ended up 19.8% at 195 pence.

   
Commodities Update
 
Oil prices flew higher yesterday on concerns of supply outages in Nigeria and Venezuela. Goldman Sachs also turned more positive on crude. Until recently the bank has been warning that the price could crash to as low as $20 per barrel as global storage ran the risk of hitting capacity. In fact, crude did pull back briefly yesterday after measurements from private oil analysis company Genscape showed a bigger-than-expected build of inventory at the hub in Cushing, Oklahoma. However, Brent and WTI soon resumed their rally and both contracts closed out a fresh six month highs. 
  
Gold and silver were both sharply higher in early trade yesterday. Both precious metals had climbed steadily throughout the morning session. However they sold off sharply as the US stock exchange opened for business. 
   
The technical set-up for gold remains constructive. The first area of significant support comes in around $1,260 but even a pull-back to $1,240 wouldn’t invalidate the current uptrend. Nevertheless, gold continues to run into resistance around $1,300 and, in the absence of investors rushing into gold as a safe-haven, it will take a weaker dollar for this level to be overcome.
  
The technical outlook for silver looks a bit more precarious. There’s some support around $17 per ounce but a break below here could lead to a pull-back to $16. The area around here acted as resistance back in February and March this year before silver scythed through it in early April in a rally that saw it briefly top $18.
   
Forex Update
 
Overnight the Reserve Bank of Australia (RBA) released the minutes of its last meeting when it its Cash Rate by 0.25% to 1.75%. The minutes showed that the decision to cut was far closer than many had expected. The Aussie dollar rallied on the news as traders calculated that the RBA was unlikely to move again in June. 
   
Yesterday’s main feature in FX was the weaker yen. Yet again, there was some jawboning by a Japanese policymaker which kept investors guessing about the possibility of intervention to keep the yen’s recent rally in check. The currency also lost ground as investor risk appetite rose once again. Typically, investors sell (borrow) the low-yielding yen (due to cheap borrowing costs) and invest the proceeds in higher-yielding (riskier) assets, such as equities. 
  
Yesterday vice Finance Minister for International Affairs Masatsugu Asakawa said that G7 and G20 countries had discussed how to deal with disorderly currency moves. He suggested that it was understood by all members that intervention could be justified if exchange rate moves were excessive (or “one-sided” as Japan’s policymakers are fond of describing recent moves in the yen).
Mr Asakawa is the most senior government official authorised to speak about the yen. Perhaps most significantly, he said that Japan would not be bound by a recent US Treasury report that appeared to warn against unilateral intervention.
   
Japan will host the G7 finance ministers and central bankers meeting beginning this Friday. Investors are wondering if Japan may get the go-ahead for intervention over the weekend. 
   
Upcoming events
 
Today’s significant data releases include UK inflation data, CPI and RPI. We also have the monthly report from the German Bundesbank. From the US we have the CPI, Housing Starts, Building Permits, Capacity Utilisation and Industrial Production. 


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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