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
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 Wednesday 15 March 2017

Oil rally gives markets lift - AM Briefing



Early moves

Unexpected oil rally gives stocks a boost

All eyes may be on tonight’s FOMC meeting and the Dutch General Election, but traders are also finding it hard to ignore what’s going on in the oil market. Crude has bounced sharply overnight thanks to yesterday’s late news of a bigger-than-expected US inventory drawdown from the American Petroleum Institute (API). This has helped to halt the slide in crude prices which began last week after data from the Energy Information Administration (EIA) showed an unexpectedly large build in crude stockpiles. The EIA will publish its latest update for the week ending 10th March later today.

The bounce in crude has helped to lift European equities this morning, and this is pretty much the main story as markets prepare for the Fed’s rate decision and the result of the Dutch election. As far as the latter is concerned, it seems impossible that far-right candidate Geert Wilders will find anyone willing to form a coalition with his Party of Freedom (PVV) and so give it control. However, there will be concerns across Europe (particularly in France) if there is a surge of support for the PVV.

Meanwhile, the whole market is expecting the US Federal Reserve to hike rates by 25 basis points later this evening. However, that’s not to suggest that there’s nothing to pay attention to after the FOMC meeting. The US central bank will also release its Summary of Economic Projections which includes the FOMC’s forecast for future monetary tightening. Then Fed Chair Janet Yellen holds a press conference. So there’s potentially plenty of material here for investors to reassess their outlook for future Fed tightening.

Stock Market Update

Polman comments on UK takeovers

Latest Lloyds sale by UK government

Paul Polman, chief executive at Unilever, has spoken out in the debate surrounding recent UK takeovers. This comes off the back of a failed takeover attempt of Unilever from US rivals Kraft-Heinz, with Polman commenting on the feeble $50 a share offer. Unilever, whose annual sales more than double that of Kraft-Heinz, promptly rejected the deal over a turbulent weekend last month which saw Unilever shares bounce over 400 pence higher.

UK Taxpayers now own a little under 3% of Lloyds Banking Group after the latest share sale. Almost ten years after the Treasury rescued the bank with £20.3 billion, a spokesman from the Treasury stated dividend payments and share sales to date have given a £19.5 billion return. The latest sale of 1% in the high street lender comes after its highest annual profits since before the crisis, leaving the Treasury confident they will be able to recover the entire amount invested as the bank is in a strong position for future growth.

Commodities Update

Crude rallies on surprising data

Metals hold steady as rate decision approaches

Yesterday’s API data gave crude prices the lift they needed to come off their three-month lows, showing a surprising drawdown in US stockpiles, timed to perfection with Goldman Sacs commenting positively on OPEC’s compliance with production cuts. Both Brent and WTI contracts rose at least 1.5% as expectations of a 3.7 million barrel increase were blown out the water by a 531,000 fall. This latest release was the first in the last ten to show a fall in inventories.

Precious metals were seen to remain within tight ranges overnight and this morning, with futures moving less than a dollar as nervous traders await the US rate decision and Dutch election results. Silver is stuck within a 10-cent range, creating an eerily quiet market in early European trade.

Forex Update

Traders turn cautious ahead of today’s data

The dollar trickled lower against its counterparts this morning as the markets await Janet Yellen & Co. later this afternoon, as guards were slightly raised in the event of an unlikely hold on rates by the Fed. Despite the fact that markets have almost entirely priced in a 25 basis point hike, wise investors should know there are never any certainties, managing their risk accordingly. Should the decision be anything other than 25 basis points, we’ll be in for a rough ride.

The yen inched higher against the dollar as the more risk-averse bought into the safe haven yen, with the euro making larger gains as the Dutch election gets underway. This election will give a good inclination of the political mentality of continental Europe. The pound regained its strength somewhat, comfortably trading back above $1.22, with Theresa May gaining control over Nicola Sturgeon’s push for a second Scottish referendum.

Upcoming Events

Amongst today’s significant economic data releases and events, the US takes the crown with a host of releases, none more important than the Federal Reserve’s interest rate decision. We will also have their monetary policy statement plus the quarterly FOMC press conference and economic projections. Earlier on in the afternoon US retail sales and CPI data is released.


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Posted by David Morrison

Category: AM Bulletin

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