Incisive market commentary from David Morrison

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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
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Early moves

Brexit talk resurrects

Mixed trading this morning

European stock indices were modestly higher on the open, reflecting Friday night’s firmer close on Wall Street. However, they drifted back from their best levels and are currently mixed in featureless trade. US indices managed to eke out gains following a very strong payroll number. This helped to convince investors that the Fed will raise rates after its two-day FOMC meeting which ends on Wednesday. Typically higher rates weigh on equities. However, the current mood is upbeat as the majority of investors seem satisfied that the US economic recovery is robust enough not just to withstand tighter monetary policy, but to thrive on the prospect of interest rates finally being normalised. There’s also the belief that the Fed is being proactive and getting ahead of the curve as the Trump administration looks to unleash waves of fiscal stimulus. The trouble is that all this comes as US equities are priced for perfection, so it would only take a mild disappointment to send investors scurrying to the side-lines.

Attention is now being brought back around to Theresa May’s Brexit talks, as the self-assigned end of March deadline approaches. After an 18% decline in the value of the pound combined with a 16% rally in the FTSE 100 index, investors are now wondering whether Britain’s exit from the European Union is truly priced in to the markets already, or whether there is more to come. Some of the large investment banks have recently stated their bearish views on the pound as British Prime Minister May prepares for the triggering of Article 50. JPMorgan Chase & Co stated earlier this month that they view sterling as the most over-valued in the G10, and Bank of America Merrill Lynch analysts predict a turbulent start to negotiations creating downside risk in the short term, with a long term view of recovery. It is expected that Article 50 will be triggered either Tuesday or Wednesday this week which, alongside the Fed’s interest rate decision on Wednesday could spell for a volatile week ahead with plenty of trading opportunities.

Stock Market Update

Homebuilder merger on the horizon?

Vodafone to bring jobs home

A story is circulating this morning that struggling Bovis Homes, in the news lately for the low quality of their new build properties, are in talks with construction firm Galliford Try over a merger. The deal could create one of Britain’s biggest homebuilders. According to a spokesperson for Bovis, they have been approached by both Galliford Try and Redrow, another builder, over possible takeovers. Redrow allegedly offered £1 billion, an offer that was promptly rejected by the board at Bovis.

Vodafone made the decision over the weekend to move its Customer Services back to the UK as they look to improve the quality of care received by their 18 million British customers. The mobile network operator has continuously been at the bottom of the rankings in terms of customer service, receiving more complaints than the UK’s other major networks combined over 2015. The move will create an additional 2,100 jobs spread across the UK, in a £2 billion investment programme said to be implemented over three years.

Commodities Update

The precious metal selloff continues

Oil struggling near 3 month lows

Gold and silver are a touch firmer this morning, helped along by some early dollar weakness. However, the greenback is once again ticking higher and that has seen the two precious metals pull back from their best levels. Both metals have fallen sharply over the last few weeks as the odds were slashed on a 25 basis point rate hike at this Wednesday’s Fed meeting.

Traders continue to react to a strong dollar and increasing US rig count, pushing oil ever lower. This morning WTI was still well below $49, touching levels not seen since the end of November as the slump reaches its fifth day, amounting to an 8.5% drop. Even Brent prices are struggling to hold their ground above $51. OPEC and other major drillers will be hoping these lower pricing will force US shale producers to pack their bags again, as the added production has been counteracting their efforts towards cuts in a bid to increase prices again.

Forex Update

Dollar remains steady this morning

After a three-day profit-taking session for forex traders, the dollar once again finds some solidity this morning as investors ready themselves for the Federal Reserve’s interest rate meeting. The euro has also gained some ground this morning, as last week’s ECB meeting highlighted that policymakers at the ECB are now considering how to react to an improving economy across the Eurozone; a topic which has not been discussed for several years. With the fundamentals still behind the dollar, traders will undoubtedly be cautious towards the pound in the first half of this week as they await an imminent triggering of Article 50.

Upcoming Events

The highlight in today’s significant economic data releases and events comes early afternoon, when we have a speech from the European Central Bank’s President Mario Draghi.


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Posted by David Morrison

Category: AM Bulletin

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