Incisive market commentary from David Morrison

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Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
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Bounce in oil helps to steady equities - AM Briefing
30 Mar 2017
US stock indices consolidate - Video Update
29 Mar 2017
Risk appetite returns - AM Briefing
29 Mar 2017
S&P500 - Topping out, or consolidating? PM Bulletin
28 Mar 2017
Risk appetite returns after the Trump wobble - AM Briefing
28 Mar 2017
Beware hidden relationships between seemingly unrelated markets - Trading Guides
27 Mar 2017
Risk assets slump in wake of Trump’s healthcare debacle - AM Briefing
27 Mar 2017
Congress vote puts markets on hold - AM Briefing
24 Mar 2017
Markets on hold ahead of crucial vote - Video Update
23 Mar 2017
Tranquil markets await big data - AM Briefing
23 Mar 2017
Investors rattled after equity sell-off - Video Update
22 Mar 2017
US Markets Snap 109-Day Streak - AM Briefing
22 Mar 2017
Crude oil update - PM Bulletin
21 Mar 2017
European markets stable on the open - AM Briefing
21 Mar 2017
Dollar slips after G20 communique - AM Briefing
20 Mar 2017
FOMC post-mortem - Video Update
16 Mar 2017
Rate hike sends stocks higher - AM Briefing
16 Mar 2017
FOMC rate decision and Dutch election in focus - Video Update
15 Mar 2017
Oil rally gives markets lift - AM Briefing
15 Mar 2017
Crude trades at lowest levels since production cut agreement - PM Bulletin
14 Mar 2017
Politicians take centre stage again - AM Briefing
14 Mar 2017
Trading Psychology: Risk Management - Trading Guides
13 Mar 2017
Article 50 deadline approaches - AM Briefing
13 Mar 2017
European stocks push higher after Draghi’s hawkish stance - AM Bulletin
10 Mar 2017
Non-Farm Payroll look-ahead - PM Bulletin
09 Mar 2017
Fed rate hike seems certain - AM Briefing
09 Mar 2017
Market expects Fed to hike rates next week - Video Update
08 Mar 2017
Another twist in the French election - AM Briefing
08 Mar 2017
Odds slashed on Fed rate hike - PM Bulletin
07 Mar 2017
Investors lacking direction this morning - AM Briefing
07 Mar 2017
Fibonacci Retracement - extensions - Trading Guides
06 Mar 2017
Equities slip in early Monday trade - AM Briefing
06 Mar 2017
Modest profit-taking sees US indices post rare loss - AM Briefing
03 Mar 2017
Crude struggles to break above resistance - Video Update
02 Mar 2017
UK baffled by the origins of their favourite brands - PM Bulletin
02 Mar 2017
Fresh record highs for major indices - AM Briefing
02 Mar 2017
All eyes turn to the Fed - Video Update
01 Mar 2017
Markets react positively to Trump speech - AM Briefing
01 Mar 2017
Expand February <span class='blogcount'>(36)</span>February (36)
Expand January <span class='blogcount'>(39)</span>January (39)
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Early moves

Politicians ruling the markets

Fed rate hike all but certain

China’s surprise trade deficit

European stock indices pushed modestly higher soon after the open despite a weaker close on Wall Street last night. For now European investors are happily shrugging aside such political concerns as the Dutch and French elections. Francois Fillon, the conservative candidate in the French presidential election, has been caught up in yet another scandal over his finances, although this looks likely to aid the moderate Emmanuel Macron rather than the far-right Eurosceptic candidate Marine Le Pen.  Later today UK Chancellor Philip Hammond is set to present his second budget, but the expectation is that this will be broadly market-neutral. Any spending increases look likely to be offset by cuts elsewhere.

More generally, US equities are coming off their record highs. Investors now expect the Federal Reserve to hike rates by 25 basis points at next week’s meeting. This is viewed as market-positive as it suggests the US economy is robust enough for the Fed to take steps to normalise monetary policy. However, there is now some speculation about how ready the Fed may be to hike further this year. If the central bank is perceived to be prepared to raise rates by 75 to 100 basis points through 2017, then this could be the trigger for some long-overdue profit-taking.

Analysts were left red-faced by the latest bout of Chinese trade balance data, missing the mark by 232.9 billion yuan. Forecasts predicted a surplus 172.5 billion but were met with a deficit of 60.4 billion yuan. China has made it no secret that they are looking to move out of manufacturing and into more of a service sector economy, with imports up 44.7% in January. But the deficit, the first in China since 2014, is likely a result skewed data and the early Lunar New Year last month.

Stock Market Update

CMC Markets to take over Australia

Can Snap Inc make it three in a row?

CMC Markets are set to become the second biggest stockbroker in Australia and New Zealand after agreeing a deal with Australia and New Zealand Banking Group in the early hours this morning. The partnership encompasses over half a million retail clients, with estimates stating gross revenue could increase by AUD 40 million. The move will significantly increase CMC’s exposure in the region,

After a successful IPO and opening two sessions, Snap Inc finished last week surrounded in optimism. By the closing bell on Thursday over 300 million shares in the Snapchat creator had exchanged hands, an unprecedented amount considering the lack of voting rights attached to the shares. Since the weekend, however, the tone has shifted dramatically as we have seen two straight sessions of losses. These haven’t been small moves either, with a 7% drop on Monday followed by a further 9.8% in yesterday’s session, taking the price well below its Thursday open. With some participants in the IPO locked in to the company for up to a year, only time will tell whether it will be a painful one.

Commodities Update

Gold touching 5-week lows

Oil prices struggling to hold ground

With the markets all but certain of a March rate hike when Janet Yellen et al meet next week, metals are having a hard time. The strength of the dollar is applying significant downward pressure on prices, pushing gold futures to $1,212.50 earlier this morning, a level it has managed to hold above since the first week of February. Silver, which has a habit of following gold when the dollar is in the driving seat, has also been on a downward path this morning. One of the few metals to show the smallest of gains in the early hours today were copper futures.

One of the first laws in economics is that of supply and demand, as a means of finding an equilibrium price. If demand is higher than supply, as we’ve seen with the London property market, prices move up; however, if the opposite is true, then prices can tumble. The oil market seems to be falling into the latter scenario, with US stockpiles continuing to increase and the latest trade data from China showing a fall in demand, we could see some significant support levels being tested for crude. There could be a silver lining, with investors awaiting inventory data due later this afternoon, but US shale producers continuing to step back in to the market it isn’t the most likely of boosts to prices.

Forex Update

Caution in the wind as Nonfarms approach

Sterling still can’t catch a break

The dollar is sticking to its tight range again this morning as investors eagerly await Friday’s jobs report. With the Fed being very open about how much they value this data when judging the health of the economy and making decisions, any sign of weakness in the figure could put some doubt in the mind of investors already with their portfolios poised for a hike. The dollar index is still holding itself well above 101, with the euro and yen experiencing timid movements as of late. The pound continues to fall in the run up to the Spring Budget, hitting seven week lows with the government preparing itself to pull the trigger on Article 50 and begin its exit from the EU.

Upcoming Events

Amongst today’s significant economic data releases and events we have the Spring Budget for the UK, US ADP Employment Change, usually seen as a guideline to Nonfarm Payrolls, Unit Labour Costs, Nonfarm Productivity and a 10-Year Note Auction to look out for. Across the Pacific in Japan we have Foreign Bond Investment and Foreign Investment in Japanese Stocks later this evening.


Posted by David Morrison

Category: AM Bulletin

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