NEWS AND ANALYSIS

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

Categories

Menu

Expand 2017 <span class='blogcount'>(307)</span>2017 (307)
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)
Collapse July <span class='blogcount'>(38)</span>July (38)
Dark clouds ahead?
29 Jul 2016
BOJ underwhelms – JPY soars
29 Jul 2016
PM Bulletin: BOJ look-ahead
28 Jul 2016
AM Bulletin: FOMC leaves rates unchanged
28 Jul 2016
PM Bulletin: Yen swinging wildly on stimulus talk
27 Jul 2016
AM Bulletin: Fed rate decision and FOMC statement in focus
27 Jul 2016
PM Bulletin: FOMC look-ahead (and Japanese stimulus talk)
26 Jul 2016
AM Bulletin: FOMC meeting begins today
26 Jul 2016
Platform Tours: CFD Trading - Check Open P & L
25 Jul 2016
PM Bulletin: EURUSD breaks below 1.1000
25 Jul 2016
Weekly Bulletin: Fed and BOJ in focus
25 Jul 2016
PM Bulletin: Sterling looking vulnerable again
22 Jul 2016
AM Bulletin: Stocks lower as oil weighs
22 Jul 2016
PM Bulletin: The EURUSD and the ECB
21 Jul 2016
AM Bulletin: ECB rate decision ahead
21 Jul 2016
PM Bulletin: ECB look-ahead
20 Jul 2016
AM Bulletin: Q2 earnings keep markets buoyant
20 Jul 2016
PM Bulletin: A look at the yen
19 Jul 2016
AM Bulletin: More records for US equities
19 Jul 2016
PM Bulletin: Precious metals pull back
18 Jul 2016
Weekly Bulletin: It’s all about stimulus
18 Jul 2016
PM Bulletin: European banks in trouble
15 Jul 2016
AM Bulletin: Sombre mood following Nice atrocity
15 Jul 2016
PM Bulletin: The BoE rate decision
14 Jul 2016
AM Bulletin: All eyes on Bank of England
14 Jul 2016
PM Bulletin: BoE Rate Decision in focus
13 Jul 2016
AM Bulletin: Equities drift lower after record US close
13 Jul 2016
PM Bulletin: Global indices pushing higher
12 Jul 2016
AM Bulletin: Equity rally powers on
12 Jul 2016
PM Bulletin: Fresh record high for S&P500
11 Jul 2016
Weekly Bulletin: The markets called, NFPs answered
11 Jul 2016
AM Bulletin: The calm before the storm; Markets await today’s NFPs
08 Jul 2016
PM Bulletin: Non-Farm Payroll look-ahead
07 Jul 2016
AM Bulletin: As the Fed turns dovish, the markets turn bullish
07 Jul 2016
AM Bulletin: Concerns continue as Sterling touches $1.27
06 Jul 2016
AM Bulletin: Markets open higher, weak UK Construction PMI data removes confidence
05 Jul 2016
Weekly Bulletin: Central Banks react to Brexit vote
04 Jul 2016
AM Bulletin: When Carney speaks, the markets listen
01 Jul 2016
Expand June <span class='blogcount'>(42)</span>June (42)
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)
 
 
 

 

Thar she blows!

Just a few weeks ago equity markets slumped following the shock Brexit news. Investors had completely miscalculated the odds on the UK voting to leave the EU. In the days that followed global stock indices slumped. European equities were hit hardest but the sell-off also led to the S&P500 breaking below 2,000 – something it hadn’t done since the beginning of this year in the aftermath of the China-inspired meltdown. But the break of 2,000 was short-lived and earlier today the S&P took out its all-time intra-day high of 2,136 made back on 19th May 2015.

The recovery began as investors decided that Brexit wasn’t the end of the world. This is despite all the uncertainty that surrounds the UK’s withdrawal from the European Union and concerns that it could mark the beginning of the end for the grand project of a united Europe. Yet all this simply makes US stocks more attractive for investors. Money has to go somewhere and exports count for a much smaller proportion of US corporate revenues and earnings than across much of Europe and Asian Pacific countries. On top of this, the feeling is that central banks now have the perfect excuse/cover to unleash further monetary stimulus.

Friday’s knock-out Non-Farm Payrolls was the catalyst for this last push higher. The June number came in at 287,000 - far better than the 107,000 expected and helping to offset May’s dismal release. However, it’s still debatable whether the Non-Farm Payrolls are really that compelling. The three-month moving average for 2016 comes in at 147,000 – well below last year’s 229,000. However, as far as investors are concerned we now have the near-perfect situation where US data points to economic improvement yet there’s very little chance that the Federal Reserve will want to raise rates in the near future given “global uncertainties.” It certainly doesn’t look likely this month, and September should be off the cards coming just ahead of November’s US Presidential Election. December looks like the earliest data for a hike although the Fed Funds futures market suggests nothing until the end of 2018.

 Over the weekend Japan’s Prime Minister Shinzo Abe’s coalition party had a landslide victory in upper house elections. This has been taken as validation for “Abenomics” – the monetary, fiscal and reform package championed by Shinzo Abe. Mr Abe was quick to hint that a 10 trillion yen ($100 billion) stimulus package is on its way.

Tonight Alcoa unofficially kicks off the second quarter earnings season. It will take a few weeks before we get a proper feel of how US corporations are faring but we could be in for yet another disappointing quarter. This may prove to be the catalyst for a downside correction. However investors may once again shrug off bad news and continue to push money into US equities.




Disclaimer:
   
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

Tagged: Bulletin PM

Category: PM Bulletin


Add a comment Add comment            

 

 
© 2017 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.