Incisive market commentary from David Morrison

Stay ahead with our market commentary and webinars from our in house market strategist

Open a Live AccountOpen a Demo Account
+ Show blog menu



Expand 2017 <span class='blogcount'>(348)</span>2017 (348)
Collapse 2016 <span class='blogcount'>(483)</span>2016 (483)
Expand December <span class='blogcount'>(23)</span>December (23)
Expand November <span class='blogcount'>(41)</span>November (41)
Expand October <span class='blogcount'>(37)</span>October (37)
Expand September <span class='blogcount'>(41)</span>September (41)
Expand August <span class='blogcount'>(52)</span>August (52)
Expand July <span class='blogcount'>(38)</span>July (38)
Collapse June <span class='blogcount'>(42)</span>June (42)
AM Bulletin: Markets rise for the second day ; back to pre-referendum levels, sterling still weak
30 Jun 2016
AM Bulletin: Confidence returns – but for how long?
29 Jun 2016
AM Bulletin: The onslaught continues – and we’re not just talking the football
28 Jun 2016
Weekly Bulletin: Investors rattled by Brexit vote
27 Jun 2016
PM Bulletin: Brexit - Referendum fallout
24 Jun 2016
AM Bulletin: We’re out! And so is Cameron
24 Jun 2016
Video Update: #AskSpreadCo - EU referendum
23 Jun 2016
AM Bulletin: Markets on tenterhooks ahead of UK vote
23 Jun 2016
Spread Betting Tips
22 Jun 2016
AM Bulletin: Risk assets waft higher
22 Jun 2016
PM Bulletin:Referendum and Market Reaction
21 Jun 2016
PM Bulletin: Gold and the referendum
21 Jun 2016
AM Bulletin: Yellen testimony in focus
21 Jun 2016
PM Bulletin: Janet Yellen’s testimony
20 Jun 2016
Weekly Bulletin: It’s all about the referendum
20 Jun 2016
Market Info Update: EU Referendum Margin Changes - CFDs
17 Jun 2016
Market Info Update: EU Referendum Margin Changes - Spread Betting
17 Jun 2016
PM Bulletin: Forecasting the referendum result
17 Jun 2016
AM Bulletin: Central banks leave rates unchanged
17 Jun 2016
PM Bulletin: FOMC post-mortem
16 Jun 2016
AM Bulletin: Yen, precious metals soar post FOMC/BOJ
16 Jun 2016
PM Bulletin: FOMC look-ahead
15 Jun 2016
AM Bulletin: FOMC meeting ahead
15 Jun 2016
PM Bulletin: European equities slide
14 Jun 2016
AM Bulletin: Stocks down on oil, growth fears and UK referendum
14 Jun 2016
Weekly Bulletin: FOMC and BOJ meetings in focus
13 Jun 2016
PM Bulletin: Markets rattled by slide in bond yields
10 Jun 2016
AM Bulletin: European stock indices drift lower
10 Jun 2016
PM Bulletin: WTI at $50 – thoughts on US production
09 Jun 2016
AM Bulletin: Precious metals soar
09 Jun 2016
PM Bulletin: S&P closes in on all-time high
08 Jun 2016
AM Bulletin: Investors in limbo ahead of Fed and UK vote
08 Jun 2016
PM Bulletin: Yellen and the jobs data
07 Jun 2016
PM Bulletin: Fresh polls send sterling lower
06 Jun 2016
Weekly Bulletin: Rate hike? What rate hike?
06 Jun 2016
PM Bulletin: A dismal Non-Farm Payroll number
03 Jun 2016
AM Bulletin: Non-Farm Payroll Friday
03 Jun 2016
PM Bulletin: Non-Farm Payrolls look-ahead
02 Jun 2016
AM Bulletin: OPEC, ECB, key data releases and central bank speakers
02 Jun 2016
PM Bulletin: OPEC and the oil price
01 Jun 2016
AM Bulletin: Manufacturing PMIs in focus
01 Jun 2016
Expand May <span class='blogcount'>(42)</span>May (42)
Expand April <span class='blogcount'>(45)</span>April (45)
Expand March <span class='blogcount'>(41)</span>March (41)
Expand February <span class='blogcount'>(42)</span>February (42)
Expand January <span class='blogcount'>(39)</span>January (39)


Indices Update

European equities and US stock index futures were lower in early trade this morning. Investors seem unwilling to push stocks much higher now and there may be some profit-taking ahead of the weekend. Oil prices have drifted into negative territory after closing lower on Thursday. Meanwhile, there some concern about German 10-year bund yields which are trading at record lows and look as if they could go negative. Earlier on Bundesbank President Jens Weidmann expressed his concerns about the ECB’s ultra-low interest rate policy. He feels that if this policy continues for an extended period it could shatter market confidence.

It was a mixed start for the major stock indices yesterday. European equities drifted lower despite a firmer close on Wall Street on Wednesday which saw the Dow close back above 18,000 for the first time since April. Investors seemed wary of pushing stocks much higher despite both Brent and WTI crude hanging on above $50. There was some concern that the Japanese yen has continued to strengthen with the USDJPY trading down to levels last seen in early May.

Yesterday European Central Bank (ECB) President Mario Draghi gave a speech warning about the lasting impact that further delays to structural reforms could have on the Euro zone's economy. This was yet another shot across the bows of EU policymakers who have continually dodged difficult decisions and relied on loose monetary policy from the ECB. This came a day after the central bank launched its corporate sector purchase programme (CSPP). This is the latest attempt by the ECB to try and boost economic growth and spark inflation across the Euro zone.

The FTSE 100 index closed at 6,231.9 down 69.6 points on the day, or 1.1%

The German DAX fell 128.2 points or 1.3% to end the day at 10,088.9

The US30 closed down 19.9 points to finish at 17,985.2. The S&P 500 fell 0.2% to close at 2,115.5 while the Nasdaq 100 slipped 0.2% to close at 4,512.7



Vodafone (VOD) fell sharply yesterday after announcing it is to merge its New Zealand business with Sky Network Television for $2.4 billion in shares and cash. The idea is to create an integrated media and telecoms group to compete with internet rivals such as Netflix. The news led to a sell-off across the entire telecoms sector. Sky has over 830,000 subscribers in New Zealand (about half of all households in the country) while Vodafone NZ is the country’s biggest mobile phone operator with 2.35 million connections. Vodafone also has more than 500,000 fixed-line connections in the country. Vodafone shares ended down 1.5% at 219.65 pence.


Commodities Update

Crude oil spent most of yesterday’s trading session in negative territory. There was no particular reason for the weaker tone, although the stronger dollar may have sparked some profit-taking.

The latest leg up in the oil price has been running since early April. Crude has continued to rally despite failures by OPEC and non-OPEC producers to cut back or even freeze output. Instead, investors have concentrated on the decline in output from US shale oil producers together with supply disruptions in Canada, Nigeria and elsewhere.  Meanwhile, despite volatility in the weekly data, US crude oil inventories remain close to record levels. On the demand side there has been no evidence so far that global demand growth is slowing down.

Gold and silver continue to build on their post-payroll gains from last week. Yesterday it was silver which was the more impressive of the two. The metal is now trading back at levels last seen in the middle of May. This was before it sold off sharply as the US dollar rallied on expectations of a summer rate hike from the US Federal Reserve. Those rate hike expectations have effectively evaporated now, particularly as far as next week’s meeting is concerned. In fact, although Fed members are still desperate to convince investors that July is still live, it now looks extremely unlikely that we’ll get a summer rate hike. Of course, if this assessment turns out to be incorrect then we can expect gold and silver to head back to $1,200 and $16 respectively in short order. But we really need to see a vast improvement in US economic data over the next month or so for the Fed to tighten in July. The most likely scenario is that the Fed pulls out all the stops to keep investors guessing about each and every meeting between now and the year-end. So, no hike this month, then July is live. If there’s no hike in July then look to September. The trouble is that the Fed loses credibility every time one of its members pops up to express an opinion these days, the reason being that the US economic data just doesn’t support their repeated assertions that the US economy is improving.


Forex Update

The euro came under pressure yesterday. It lost ground against all the majors and was sharply lower against both the US dollar and Japanese yen. The single currency fell after ECB President Mario Draghi said that Europe was in danger of suffering lasting economic damage from weak productivity and low growth. Yet again, Mr Draghi stated that monetary policy alone cannot end the Euro zone's problems. He outlined three structural measures which could help boost productivity: consolidating the single market, instituting reforms to help companies scale up quickly, and providing more education and training schemes.

The weakness of the single currency combined with yen strength saw the EURJPY hit its lowest level since April 2013, falling over 1% in European trade. Meanwhile, the USDJPY slumped back below 107.00 and traded down to levels last seen at the beginning of May. The strength of the yen is particularly bad news for Japan which is desperate to weaken its currency to boost exports, ignite inflation and spur economic growth.

The US dollar was generally firmer yesterday. However, it seems likely that its upside potential will be limited ahead of next week’s raft of central bank meetings. The market no longer expects the Federal Reserve to tighten monetary policy on Wednesday. However, it is difficult to predict how the yen will behave ahead of Thursday’s BOJ meeting. If the BOJ does take the plunge with additional monetary stimulus, it will have to be substantial to spark a significant reversal in the yen’s fortunes. Investors will be mindful of the time the BOJ took markets by surprise and adopted negative interest rates in January this year. Despite the move, the yen subsequently strengthened.

In other FX news, the New Zealand dollar surged to a one-year high overnight after the Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged at 2.25%. This surprised some investors who had been betting on a rate cut. RBNZ Governor Graeme Wheeler said later at a media conference the bank would not hesitate to adjust interest rates if needed. The RBNZ talked about the quandary they have of dealing with a booming housing market while keeping their currency competitive.  


Upcoming events

Today’s significant data releases and events include a speech from German Bundesbank President (and senior ECB member) Jens Weidmann, Italian Industrial Production, UK Construction Output and Consumer Inflation Expectations. We also have Canadian employment data while from the US we have Consumer Sentiment, Inflation Expectations and the Federal Budget Balance.


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

Add a comment Add comment            


© 2018 Spread Co Limited. All Rights Reserved.

Spread Co Limited is a limited liability company registered in England and Wales with its registered office at 22 Bruton Street, London W1J 6QE. Company No. 05614477. Spread Co Limited is authorised and regulated by the Financial Conduct Authority. Register No. 446677.

Spread betting and CFD trading are leveraged products and can result in losses that exceed your deposits. Ensure you understand the risks.

Losses can exceed deposits. Click here to learn more.