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



Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
Expand November <span class='blogcount'>(26)</span>November (26)
Expand October <span class='blogcount'>(24)</span>October (24)
Expand September <span class='blogcount'>(33)</span>September (33)
Expand August <span class='blogcount'>(26)</span>August (26)
Expand July <span class='blogcount'>(32)</span>July (32)
Expand June <span class='blogcount'>(28)</span>June (28)
Collapse May <span class='blogcount'>(35)</span>May (35)
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
Expand April <span class='blogcount'>(31)</span>April (31)
Expand March <span class='blogcount'>(38)</span>March (38)
Expand February <span class='blogcount'>(36)</span>February (36)
Expand January <span class='blogcount'>(39)</span>January (39)
Expand 2016 <span class='blogcount'>(483)</span>2016 (483)


Early moves

European indices higher on PMI data

Trump proposes sell-off of strategic petroleum reserve

European indices were little-changed first thing, but are now universally firmer. As it invariably turns out, markets show scant regard for terror attacks once it is established that any atrocity is an isolated incident. But our thoughts are with those affected by last night’s appalling incident in Manchester.

After a few quiet days on the data front, today brings a ton of economic releases. First up, we have Flash Manufacturing and Services PMIs from across the Euro zone and the German Ifo Business Climate survey. So far we’ve had a weak French Manufacturing PMI and strong Services, and a strong German Manufacturing number with a disappointing reading on Services. All in all, the numbers have been received positively and the euro is a tad stronger.

Later on we have the Bank of England’s Inflation Report Hearings, US Manufacturing and Services PMIs, New Home Sales and speeches from FOMC-voting members Neel Kashkari and Patrick Harker. And tomorrow sees the release of minutes from the FOMC’s rate decision meeting earlier this month. Analysts expect the Fed to signal that a rate hike is on the cards at next month’s meeting.

Meanwhile, crude is a touch weaker. The big news here is Trump’s proposal to sell -off half of the US’s strategic petroleum reserve. This would take place between 2018 and 2027 to raise around $16.5 billion. The move is a big sign of confidence in the ability of the US to ramp up future production. It also comes ahead of this week’s key OPEC meeting. 

Stock Index Update

Indices continue to make back losses

Trump’s foreign tour: so far, so good

Last night US indices closed higher, holding on to gains made earlier in the day. European indices were also a touch firmer in early trade yesterday. Investors were reacting to Friday’s bounce-back on Wall Street, together with relief that Donald Trump’s visit to Saudi Arabia appeared to be a success. But it ended up being a mixed session with losses on the German DAX and Spanish IBEX. This was despite the US majors all trading well into positive territory at the European close.

Last Wednesday the Dow and the S&P500 registered their biggest daily drops since last September. The sell-off also saw the NASDAQ post its biggest decline since last summer, pulling back from hitting a record closing high the night before. Investors were rattled by stories of the Trump administration’s dealings with Russia in the lead-up to and immediately following the US presidential election. This hit a new level of seriousness after Ex-FBI Director James Comey alleged that President Trump attempted to intimidate him into calling off an investigation into Michael Flynn. Mr Flynn was Trump’s original pick as National Security advisor but was forced to resign as it became apparent he had failed to disclose full details over his contacts with Russian officials. But investors recovered their collective mojo after ex-FBI head Robert Mueller was appointed as special counsel to investigate the Trump administration’s Russian dealings.

Commodities Update

Trump proposes sales from strategic reserve

Precious metals build on recent gains

Crude is a touch weaker this morning. This follows the news of Trump’s proposal to sell -off half of the US’s strategic petroleum reserve. This would take place between 2018 and 2027 to raise around $16.5 billion. The move is a big sign of confidence in the ability of the US to ramp up future production. It also comes ahead of this week’s key OPEC meeting. 

Oil continued to rally yesterday. On Friday both WTI and Brent chalked up their best week of gains since the end of November. Traders are looking ahead to this week’s OPEC meeting and positioning themselves accordingly. There’s been near non-stop speculation since the beginning of the month that OPEC and a number of significant non-OPEC producers are prepared to extend their agreement to cut output by around 1.8 million barrels per day. The talk is that Saudi Arabia and Russia are trying to persuade other oil producing countries to extend the deadline for cuts to March 2018 from June this year. There is also chatter that the output cut could be increased above 1.8 million barrels per day.

But the worry must be that crude fails to take off and make a fresh high plateau. There’s resistance for WTI around $54 and Brent around $57. The last time oil has traded above $60 was just under two years ago. It would seem most unlikely that crude could maintain such high levels given the likelihood that US shale oil production would increase dramatically.

As with crude oil, gold and silver managed to build on last week’s gains and pushed higher yesterday. Silver led the charge and was over 1.5%higher a one stage after it broke above $17 for the first time since the beginning of this month when it suddenly slumped on an unexplained sell-off.

Both precious metals have been getting a lift from recent short-covering and the recent sell-off in the US dollar. Yesterday the Dollar Index continued to slide, hitting its lowest level since the US presidential election last November.

Forex Update

Euro up after Merkel comments

Dollar remains under pressure

The dollar fell again yesterday in a continuation of last week’s sell-off. The Dollar Index traded back to levels last seen at the time of the US presidential election in early November. The dollar itself hit a fourteen-year high against the euro at the beginning of January. However, the EURUSD has risen over 8% since then while the Dollar Index is down just under 7% over the same period. Yesterday the dollar wasn’t helped by comments from German Chancellor Angela Merkel. Frau Merkel said that euro weakness was to blame for Germany’s trade surplus, and this was something outside the German government’s control. Of course, a cheaper euro boosts the attractiveness of German exports. However, Germany also has a significant trade surplus with her Euro zone neighbours, and Mrs Merkel’s comments seem a rather poor attempt to deflect criticism. This was evident most recently in comments made by Emmanuel Macron during the French presidential election.  However, Frau Merkel is also seen as setting the stage ahead of this week’s G7 meetings when German officials could agitate for tighter monetary policy from the European Central Bank. On the other side of the currency pair, President Trump has done a good job of talking down the dollar so far this year.

Upcoming events

Today’s significant events and economic data releases include French, German and Euro zone Flash Manufacturing and Services PMIs and Germany’s Ifo Business Climate. From the UK we have Public Sector Net Borrowing, Inflation Report Hearings and Inflation Report Hearings. From the US we have Flash Manufacturing, Flash Services, New Home Sales and the Richmond Manufacturing Index. There are also speeches from FOMC-voting members Neel Kashkari and Patrick Harker.


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.