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
Expand February <span class='blogcount'>(36)</span>February (36)
Expand January <span class='blogcount'>(39)</span>January (39)
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Early moves

North Korea shoots down the Nikkei

European markets open the week lower

Early this morning Japan’s feathers were more than ruffled when it emerged that North Korea had once again performed a ballistic missile test, this time flying 1,000km into Japan’s Exclusive Economic Zone. The missiles were a mere 350km from Japan’s shore, which undoubtedly is a cause for concern for both the countries in the region and for NATO. Other Asian markets managed to shrug off any worries after the missile strike, moving slightly higher when focusing on commodity prices and local market drivers.

There’s a softer tone across European equity markets and US stock index futures this morning. This is despite news some positive news on the corporate front with a merger proposal between Aberdeen Asset Management and Standard Life.  In addition, Peugeot owner PSA confirmed it was acquiring the Vauxhall and Opel brands from General Motors for €2.2 billion. However, Deutsche Bank shares fell as far sharply on the open after it announced it was looking to raise €8 billion in a rights issue later this month.

Otherwise, the banking sector should continue to get some support from the prospect of another US rate hike in just over a week’s time. On Friday evening Fed Chair Janet Yellen gave the clearest indication yet that the US central bank was ready to tighten monetary policy further. Dr Yellen said that the US economy was resilient and had met the Fed’s goals so that a March hike would be appropriate if the economy stayed on track. This seemed to keep a sliver of get-out should this Friday’s Non-Farm Payrolls disappoint. However, it’s unlikely that Fed members would provide such a uniform and united front on monetary policy ahead of a meeting only to turn round and wrong-foot investors on the day itself. The big question now is whether the impending hike gives investors an excuse to book profits after an incredible equity market run, or if it gives further confidence in hopes for a further US economic recovery.

Stock Index Update

Deutsche Bank drags markets lower

Big merger news in the UK

Germany’s largest bank was once again in the headlines over the weekend after announcing an $8.5 billion rights issue as a means of raising some much-needed capital for the struggling lender. This move is more than likely a response to the $7.2 billion Deutsche owe the US Department of Justice as punishment for mis-selling mortgage-backed securities during the run-up to the 2008 crash. Deutsche shares weighed the European markets lower this morning, opening down 5% to lie bottom of the Dax.

The FTSE received a quick boost after news emerged that two of the largest asset managers have agreed to a £3.8 billion merger. The all-share deal would create the larger asset manager in the UK, and is rumoured to reflect both parties in its new name, which is yet to be released. The new investment giant will be based in Scotland and appears to be a fair split with Aberdeen’s Martin Gilbert and Standard Life’s Keith Skeoch acting as co-chief executives. Standard Life shares were up 7%, while Aberdeen shares moved 5% higher.

General Motors added some more fuel to the markets this morning as they announced the selling of their European operations, which include Vauxhall (Opel to anyone outside the UK). The buyers, Peugeot Citroen’s owner PSA Group, are set to become the second largest auto maker in Europe with this €2.2 billion purchase, with only Volkswagen above them. Peugeot Citroen shares jumped 4% on the back of this news.

Commodities Update

Political fears mean gains for gold

Oil lower on a rising rig count

Kim Jong-un’s latest antics have sent the safe havens higher this morning, with gold futures still trading in the familiar range between $1,220-$1,240. Fear tends to lead investors towards gold, and with Friday’s US Nonfarm Payroll to prepare for, you could see some risk averse moves this week. Gold remains sensitive to US rates, and with some measures pricing in probabilities of 80% and higher of a March rate hike, this may be pinning prices down. Friday’s figures could give further indication as to what the Fed could decide, however after a year of surprise results you can never be too sure what the future holds. As for other metals, silver futures were trading higher this morning, while China’s bleak re-evaluation of its economic growth forecast has brought copper prices lower.

Oil prices trickles down this morning as despite OPEC cuts, US stockpiles continue to rise. According to Baker Hughes, the US rig count increased by a further 7 rigs last week, as US shale producers seem to be making to most of a $50-plus crude price. There are growing concerns surrounding US shale production, which is counteracting the efforts to cut production by both OPEC and non-OPEC countries around the world. Last week crude stockpiles in the US grew to another all-time high of more than 520 million barrels.

Forex Update

Dollar holding steady

Safe-haven yen gains ground

The only real movement in the forex markets this morning came in the form of a defensive move towards the Yen. Much like the shift into gold, the Yen provides a stable base for investors in times of uncertainty. Aside from this move, the dollar remained grounded against all other majors, after a move away from five week highs on Friday. It seems Trump is still causing a stir in the markets, as his latest rant accusing Barack Obama of wiretapping during the election campaigns is believed to be a trivial distraction from the new President tackling his economic policy issues.

Upcoming events

Today’s significant economic data releases and events include the UK’s Monetary Policy Committee’s Hogg speaking at 11:30 as well as US Factory orders for the month of January.


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Posted by Michael Campbell

Category: AM Bulletin

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