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)
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Early moves

ADPs smash expectations

Backlash of the Spring Budget

More disappointing data from China

As if a rate hike wasn’t priced in enough already, yesterday’s shock ADP figures raised expectations of Yellen and Co providing another 25 basis points even further. The Employment Change released by the ADP measures the change in the number of people employed in the private sector in the US, and so is often used as a barometer of what to expect come Nonfarm Payrolls. This month, the month when Fed members suggested that only a poor set of data could disrupt a rate hike next week, has seen private sector employment increase by a staggering 298,000 – well above the 190,000 analysts were expecting. The shock factor has left the markets with little doubt that Non-Farms will also come out strong and the seeds will be sown for a hike, with Bloomberg’s World Interest Rate Probability showing a 100% likelihood. 

Across the pond in London, Chancellor Phillip Hammond announced the Spring Budget, grinding the gears of the self-employed and income-seeking investors alike. A quick overview of the changes is that the self-employed will see their National Insurance increase, the tax-free dividend allowance which was only recently increased to £5,000, has now decreased to £2,000. There was some good news in there as well, with the government taking baby steps to ease small business taxes, whilst stating they are working on a method for more efficiently taxing the digital economy to level the playing field. With this increased budget, it seems the complaints were heard as schools and the NHS look to benefit. The FTSE swung throughout the Budget announcement, ending the session slightly lower to make it five straight losses, continuing the decline into Thursday.

After discovering China had a trade deficit and an unexpectedly large foreign exchange reserve early Wednesday morning, Asian markets were dealt another blow in the form of Chinese inflation data. Overnight we had both CPI and PPI for the month of February, with the CPI at a mere 0.8%, down from 2.5% a month earlier. Alongside a slowdown in CPI, PPI shot up to 7.8% from a year earlier, indicating profits could be hurt for manufacturers. China had been benefitting from cheap natural resources as part of the infrastructure deals made across the African continent over the past few years, so there is a chance that these deals could be expiring, leading to a rise in prices.

Stock Market Update

Full year profits for Co-op Bank and Morrison’s

Standard Life loses star fund manager

The Co-operative Bank has pinned the blame on low interest rates and “legacy issues” for their £477.1 million loss for 2016. The bank, which is up for sale after a £1.5 billion bailout four years ago, has apparently received a pleasing amount of interest from potential buyers. Attention may be drawn to the scandal-clad bank as despite showing yet another full-year loss, the loss itself is a good £133.5 million less than 2015’s, possibly indicating the lender is at least on the right track.

Morrison’s was another to report sales and profit for the year, breaking a three-year trend of losses. Pre-tax profit stood at £325 million, which at least in part could be the result of chief executive David Potts, who promised a turnaround. The market’s reaction to this news: sell it on the open.  Shares were down 4.6% not long after the bell.

Eyebrows have been raised in the direction of Standard Life this morning, after one of their most esteemed fund managers, David Cumming, announced his immediate departure from the asset manager he has spent the past 18 years at. The head of equity’s shock exodus has many making links to the £11 billion merger of Standard Life and Aberdeen Asset Management, which became public earlier this week, despite Cumming stating the move is to pursue other interests.

Commodities Update

Crude inventories explained

Expected rate hike hurting gold

Crude oil plunged yesterday following the latest update on US inventories which showed a bigger-than-expected build in stockpiles. The news saw both WTI and Brent slice below prior support levels to trade at their lowest levels since mid-December. While the inventory release was the catalyst for the move, the sell-off was exacerbated by an exceptionally bullish speculative positioning. The more the oil price fell, the more speculators rushed to close out their long positions. The pull-back in crude is weighing on equities currently, despite a modest recovery this morning. But the big question now is whether this sell-off has damaged the technical structure of the market, undoing all the positive work of the OPEC/non-OPEC production cut agreement.

Another day, another slump in gold prices. With investors almost certain of an approaching rate hike from the Fed, gold prices have taken a pounding, with futures down eight sessions in a row as it heads towards $1,200. Other precious metals followed suit with gold, with even industrial metals such as Copper taking a hit, as the combination of a strong dollar and weak Chinese data drove prices lower.

Forex Update

Dollar gets pumped ahead of rate announcement

Anticipations for a rate hike continue to give the dollar strength over its counterparties hovering at a 2-month peak, with almost every measure pricing in at least a 90% chance of an increase. Should the market be wrong and rates remain unchanged, the dollar would almost certainly see a large readjustment. As it stands this morning, the euro is cautiously creeping lower ahead of the ECB policy meeting later today, with the pound still down in the mid-$1.21 range, not able to get a boost from Hammond’s Budget.

Upcoming Events

Amongst today’s significant economic data releases and events we have the ECB decision on both their interest and deposit rates along with their monetary policy statement, all this afternoon. In amongst that we will get initial jobless claims out of the US.


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Posted by David Morrison

Category: AM Bulletin

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