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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Early moves

Brexit bill passed by Parliament

FOMC meeting looms

There’s been a pick-up in selling across European equities and US stock index futures since the open. This reflects uncertainty over the European political scene following calls for a fresh Scottish referendum, the imminent triggering of Article 50 to kick-start Brexit and tomorrow’s Dutch general Election. All this and a Fed rate decision too.

Last night saw Theresa May’s government took a further step in their plans to lead the UK out of the EU as Parliament passed the Brexit bill. It is expected the law will receive Royal Ascent and become law at some point today, leaving the government free to trigger Article 50, however this is believed to be held off until the last week of March as pressure from Nicola Sturgeon, Scotland’s first minister, who is determined to hold a second Scottish referendum, is attracting the Prime Minister’s attention. Shares opened higher in London off the back of this, as the pound weakened early this morning.

US Treasury bonds have sold off recently as investors price in the prospect of four 25 basis point hikes this year - up from two just a few weeks ago. The yield on the key US 10-year is back over 2.6% - a level that the “Bond King” Bill Gross of Janus has said could be problematic for the wider market going forward. Analysts will be pouring over the Fed’s language for clues over the likelihood of more aggressive tightening.

Stock Market Update

Lloyds cutting nearly 2,000 jobs

Valeant Pharmaceuticals tank as Ackman walks away

Lloyds Banking Group is looking to outsource the majority of its information technology enterprise to IBM, in a move that would leave 1,961 employees and contractors having to move over to the American computing group. However, IBM will be looking to transfer much of this work offshore, meaning all but 193 of these workers are sure to lose their jobs within the next four years.

Pershing Square Capital Management’s hedge fund manager Bill Ackman sent Valeant Pharmaceuticals shares plummeting lower as he hold their 10% stake in the company. Ackman, who is also a member of the board at Valeant, plans to step down without wanting to be up for re-election. The decision appears to be purely financial, as Pershing Square began buying its stake before the Accounting scandal which sent Valeant shares from $200 to just $12. They are facing more than a 90% loss on the drug maker. Valeant shares dropped more than 7% in after-hours trading, swapping hands at roughly $11.

Commodities Update

Crude oil under pressure

Yesterday crude traded down to its lowest level since the end of November, back when OPEC and non-OPEC producers confirmed an agreement to cut production. So far the oil market has failed to recoup its losses from last week suggesting some serious structural damage has been done to the market. In fact, there had been hopes that last week’s sell-off may have seen the market rebalance somewhat as there had been a record build-up of speculative longs. However, there’s little evidence of any significant repositioning of the long side suggesting that crude could remain under pressure for some time to come. For now this is having little effect on equity markets. However, this could change if crude has another lurch lower and then continued to trade under $50 per barrel.

Meanwhile, gold and silver continue to struggle ahead of tomorrow’s FOMC rate decision. Some observers believe that the two precious metals could bounce once the meeting is out of the way. However, neither metal looks particularly oversold at the moment.

Forex Update

Pound hits 8-week lows

Sterling took a 0.7% slide this morning against the dollar as investor’s nerves kicked in following Theresa May’s green light to proceed with Brexit negotiations and a potential Scottish referendum on the horizon. This came after a comfortable Monday for the pound, making some modest gains after Sturgeon stated that she plans a referendum for late 2018, only for it all to be erased this morning as fresh eight-week lows were hit.

Aside from the slump in the pound, the dollar held steady against its other counterparts ahead of the FOMC interest rate meeting, with a 25 basis point hike almost entirely priced in. The euro fell slightly as the market eagerly awaits results from the Dutch general elections tomorrow.

Upcoming Events

Amongst today’s significant economic data releases and events we have Industrial Production for the Eurozone this morning and the Labour Market Conditions Index from the US in the afternoon.


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Posted by David Morrison

Category: AM Bulletin

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