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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 were generally firmer in early trade yesterday. However, they gave up these gains as the US open approached. Investors had initially ignored a pull-back in oil prices. But this became more of an issue as the session progressed and prices remained under pressure. Investors were also anxious ahead of Federal Reserve Chairman Janet Yellen’s speech to the Economic Club of New York.

European and US stock index futures soared following the release of the text of her speech. Mrs Yellen proved to be considerably more dovish than her colleagues from last week who appeared to open the door for an April rate hike. The Fed chairman emphasised that the central bank’s monetary policy was data-dependent. Also, while she noted that the Fed currently had little room to cut should inflation once again fall, she more than countered this hawkishness by saying the “FOMC would still have considerable scope to provide additional accommodation……Specifically….increases in the size or duration of our holdings of long-term securities.” In other words, Mrs Yellen has re-invoked the spectre of additional quantitative easing.

The comments sent the dollar down and just about everything else up. The only problem is that at some stage investors may begin to wonder why the global financial markets are still on life support seven years after the nadir of the Great Financial Crisis.

The FTSE 100 index closed at 6,105.9 down 0.6 points on the day, so effectively unchanged

The German DAX rose 36.6 points or 0.4% to finish at 9,887.9

The US30 closed up 97.7 points to finish at 17,633.1 The S&P 500 rose 0.9% to close at 2,055 while the Nasdaq 100 rallied 1.6% to close at 4,467.7

Equities Update

The FTSE100 ended yesterday effectively unchanged. Yet despite this, there were a number of big movers within the index. As is so often the case, it was mining and energy companies which dominated and four of them topped the loser-list thanks to a sharp sell-off in base metals and oil. Anglo American (AAL) ended the day 4.3% down at 479.1 pence. Rio Tinto (RIO) fell 3.9% to close at 1,863 pence while BHP Billiton (BLT) lost 3.7% and finished at 750 pence while Antofagasta (ANTO) slipped 3.3% to 454 pence.

Commodities Update

Crude oil drifted lower in early trade yesterday and the sell-off intensified as the European session progressed. As noted yesterday the rally in crude appeared to be losing some of its upside momentum. Last week’s inventory data from the Energy Information Administration (EIA) reported 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.

WTI rallied around 60% off the intra-day low hit back in mid-February to over $42 per barrel a week and a half ago. Brent is up over 40% over the same period. The gains came as investors convinced themselves that the lows were in for crude oil. The US dollar has also pulled back over the same period while OPEC and non-OPEC producers have done an excellent job of talking up the oil price while continuing to keep output up at elevated levels. They managed this through talk of implementing a price freeze at January levels. Talk of an agreement by Saudi Arabia, Russia, Venezuela and Qatar was initially rubbished by Iran. However, a meeting involving a significant number of producers is now scheduled to take place on 17th April in Qatar. It now looks as if Iran will attend although the country is unlikely to agree to take part in any price freeze. Iran is attempting to drive output up to pre-sanction levels and needs more time to achieve this. In any case, many analysts believe that even if all attendees manage to agree to some kind of production freeze, the effects on existing inventories will be negligible. Last week the International Energy Agency (IEA) pointed out that freezing output at January’s levels is “meaningless.” And even that assumes that everyone sticks to their promises – something which is seen as being very low probability.

Gold and silver continued to struggle yesterday despite little early movement in the US dollar. However, both picked up later in the day as the US dollar pulled back from its best levels. Dollar-denominated commodities tend to rise when the greenback falls, and vice versa. This is because these commodities become cheaper for buyers using other currencies when the dollar loses value.

Both gold and silver pulled back from their best levels ahead of Janet Yellen’s speech at the Economic Club of New York luncheon. However, they flew higher along as the US dollar slumped once the contents of her speech were released. Mrs Yellen tempered last week’s hawkish rhetoric from a number of regional Federal Reserve presidents. They had raised the prospect of an April rate hike. However, yesterday the Fed Chairman noted that economic and financial conditions are somewhat less favourable than they were back in December when the Fed raised interest rates for the first time since June 2006. 

Forex Update

There was relatively little movement in FX yesterday ahead of Janet Yellen’s speech to the Economic Club of New York. The Federal Reserve Chairman was scheduled to address members on "Economic Outlook and Monetary Policy.” Investors were hoping that she would help clarify the US central bank’s view concerning future monetary policy. There has been considerable confusion of late following statements last week from a number of regional Federal Reserve presidents. These were fairly hawkish in tone and suggested that the central bank could raise rates again at next month’s meeting. Such comments appeared to run contrary to the Fed’s FOMC statement and Summary of Economic Projections which was released around a fortnight ago. The latter were viewed as dovish as Fed members dialled back on their prediction for the pace and timing of future rate hikes. Monday’s inflation data added to the confusion as the Personal Consumption and Expenditure number came in lower than expected, suggesting less pressure for the Fed to tighten next month.  

But yesterday Mrs Yellen proved to be more dovish in her comments than her colleagues from last week. The dollar slumped as a result. Now there can be little doubt that Janet Yellen’s is the most important voice at the Fed, so what she says should be taken more seriously than anything some regional presidents say. However, it does rather feel that Fed members are playing a rather unsubtle game with the markets – veering between dovishness and hawkishness. Suddenly investors have flipped from pricing in the possibility of another rate hike next month, to now doubting if there will be one before September. This may be good for market volatility, but it’s really no way to help steer the global economy. 

Upcoming events

Today’s significant economic events include German preliminary CPI, US ADP Non-Farm Employment change and US Crude Oil Inventories.

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

Category: AM Bulletin


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