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Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
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Tory Poll Lead Narrows Sharply - Video Update
31 May 2017
S&P 500 and NASDAQ break winning streak
31 May 2017
Sterling swings on polls - PM Bulletin
30 May 2017
Equities drift after long holiday weekend - AM Briefing
30 May 2017
Crude oil slumps on OPEC disappointment - AM Briefing
26 May 2017
OPEC disappoints while FOMC minutes provide cheer - Video Update
25 May 2017
OPEC expected to agree 9-month extension - AM Briefing
25 May 2017
Look-ahead to OPEC - Video Update
24 May 2017
Markets quiet ahead of FOMC minutes and OPEC - AM Briefing
24 May 2017
Crude oil update - OPEC meeting in focus - PM Bulletin
23 May 2017
Markets shrug off atrocity in Manchester - AM Briefing
23 May 2017
Equities mixed, but supported by oil
22 May 2017
Nerves steady after firmer close on Wall Street - AM Briefing
19 May 2017
Political fall-out continues to weigh on markets - Video Update
18 May 2017
Slide in European indices accelerates - AM Bulletin
18 May 2017
Trump’s woes hit markets - Video Update
17 May 2017
Trump’s woes lead to market wobble - AM Briefing
17 May 2017
EURUSD hits six-month high - PM Bulletin
16 May 2017
Crude oil extends rally - AM Briefing
16 May 2017
US inflation data and retail sales in focus - AM Briefing
12 May 2017
Crude oil recovers after “flash crash”- Video Update
11 May 2017
Crude oil soars while equities drift - AM Briefing
11 May 2017
Are investors too complacent? - Video Update
10 May 2017
Investors rattled after Trump fires FBI head - AM bulletin
10 May 2017
Crude oil’s “flash crash” leads to OPEC desperation - PM Bulletin
09 May 2017
Equities rally as oil steadies - AM Briefing
09 May 2017
Forex: Top Ten Tips for beginners - Trading Guides
08 May 2017
Markets little moved after Macron win - AM Briefing
08 May 2017
Payrolls in focus - AM Briefing
05 May 2017
NFP look-ahead - Video Update
04 May 2017
FOMC hints at rate hike in June - AM Briefing
04 May 2017
FOMC look-ahead - Video Update
03 May 2017
Apple disappoints on sales numbers - AM Briefing
03 May 2017
CFD Trading Tips - Trading Guides
02 May 2017
European traders return after May Day - AM Briefing
02 May 2017
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Early moves

·         Slightly higher bias for European indices

·         US indices end mixed

European stock indices have a slightly higher bias this morning following yesterday’s Bank Holiday break. Overnight the Reserve Bank of Australia kept its headline Cash Rate unchanged at 1.50% as expected. Crude oil is lower again while precious metals have steadied.

Yesterday the NASDAQ soared to yet another fresh record high. However, neither the Dow nor the S&P500 were able to take out their own record closes made back at the beginning of March. In fact, the Dow had an early wobble. This followed comments from President Trump when he said he would consider breaking up the big banks.

There are a number of significant market events due out this week. The US Federal Reserve begins a two-day monetary policy meeting which will conclude tomorrow. The current probability of a rate hike at this meeting is less than 5%. On Friday we have the latest US Non-Farm Payroll update. This will be watched carefully. Not only because last month’s number was so surprisingly weak, but also as this update comes amid a series of disappointing US economic numbers. Then on Sunday we have the final head-to-head in the French presidential election.

Stock Index Update

·         Europe closed for May Day

·         US investors shrug off weak data

European stock indices ended in positive territory on Friday ahead of the long holiday weekend. The majors made back earlier losses, boosted by earnings and a continued pick-up in US tech stocks. But the UK’s FTSE100 drifted a touch - hurt by the continued rally in the British pound. Yesterday sterling pulled back from its best levels on mild profit-taking. At the end of last week the GBPUSD hit its highest level since September last year.

With the European markets closed, yesterday the focus was on the US majors. There were some modest gains for the Dow, NASDAQ and S&P. Traders shrugged off a clutch of weak data and instead focused on political events and corporate earnings. At the end of last week the US government averted a shut down when policymakers on both sides agreed to a spending package. This will keep the government funded through to September. This news, along with a continuation of a solid first quarter earnings season helped offset some disappointing US data releases. At the end of last week we had poor Durable Goods numbers and a weak first quarter GDP. This rose just 0.7% annualised which was well below both the 2.1% recorded in the fourth quarter and the consensus expectation of a 1.2% rise. Nevertheless, it was above estimates from the Atlanta Fed which last week predicted that growth would come in around +0.2%. Then yesterday there were disappointments on Personal Spending, Consumer Spending, PCE inflation data and the ISM Manufacturing index.

Commodities Update

·         Crude oil falls again on weak data/rig count

·         Precious metals slump

Crude fell yesterday, in a move which was a continuation of the sell-off seen at the end of last week. Traders were rattled by the release of some disappointing US economic data along with yet another rise in the US rig count. On Friday US first quarter GDP rose just 0.7% annualised. This was well below both the 2.1% recorded in the fourth quarter and the consensus expectation of a 1.2% rise. Nevertheless, it was above estimates from the Atlanta Fed which last week predicted that growth would come in around +0.2%. Then yesterday there were disappointments on Personal Spending, Consumer Spending, PCE inflation data and the ISM Manufacturing index. On top of this the latest data from oil services provider Baker Hughes showed that the US oil rig count rose again to hit its highest level since April 2015.

Precious metals slumped yesterday. Silver led the move when it sliced through some minor support around $17.20. The selling momentum then picked up pushing the metal below $17.00 and the next level of support comes in around $16.80. This marks the 61.8% Fibonacci Retracement of the rally which saw silver bounce from a multi-month low around $15.60 in December 2016 to the high above $18.60 made just a few weeks ago. Meanwhile, gold is closing in on $1,250 which is the 50% retracement of gold’s sell-off between July and December 2016. Yesterday’s falls came despite relatively little movement in the US dollar and some weaker-than-expected economic data. Traders suggested the sell-off came after the US Congress agreed to a spending package at the end of last week which averted a government shut-down.

Forex Update

·         Euro rallies on inflation data

·         FX quiet over May Day break

Yesterday saw a quiet session for the dollar thanks to the Bank Holidays across Europe and the UK. The dollar was little-changed while the euro continued to rally. The biggest move came in sterling which fell on profit-taking. At the end of last week the GBPUSD hit its highest level since September last year.

On Friday the euro soared following the release of Euro zone inflation data. The headline CPI (including food and energy) rose to 1.9% - well above March’s 1.5% year-on-year reading. Core CPI (which excludes volatile food and energy components) rose to 1.2%. Again, this was a significant increase when compared to the +0.7% recorded in March. The data release came just one day after the ECB meeting where the Governing Council maintained its accommodative stance on monetary policy. In addition, ECB President Mario Draghi repeatedly emphasised that Euro zone inflation was not yet on a sustainable path to the central banks 2.0% (but not over) optimal level. This saw the euro fall sharply. Mr Draghi said he expected a modest pick-up in inflation in April which should then level out for the rest of the year. However, traders were taken by surprise at the strength in April’s number. On Thursday the feeling was that the central bank could keep monetary policy unchanged for the rest of this year. Now there’s speculation that the ECB could signal a reduction in its bond purchase programme as early as its next meeting in early June.

Upcoming events

Today’s significant economic data releases and events include Manufacturing PMIs from Switzerland, Spain, Italy, France, Germany, the Euro zone and the UK. We also have Euro zone Unemployment and US total Vehicle Sales.


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Posted by David Morrison

Category: AM Bulletin

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