Incisive market commentary from David Morrison

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Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
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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)
Expand January <span class='blogcount'>(39)</span>January (39)
Expand 2016 <span class='blogcount'>(483)</span>2016 (483)


Early moves

Europe follows up on US rally

European stock indices shot higher on the open, playing catch-up after last night’s rally on Wall Street. Investors piled back into equities, bonds and precious metals while selling the dollar following the release of the Federal Reserve’s statement, Summary of Economic Projections and news that the central bank had hiked fed funds by 25 basis points. The interest rate increase was expected as Fed members have spent most of this month preparing the markets for tighter monetary policy. However, the statement and Summary (and in particular the FOMC’s “Dot Plot”) were less hawkish than anticipated. Recent statements from Fed members had led investors to believe that the central bank may be prepared to raise rates by 100 basis points over the course of 2017 - up from the 75 forecast back in December. However, there was no material change in the FOMC’s outlook for future rate hikes, inflation, unemployment or growth. Consequently, investors have had to quickly dial back on their rate hike assumptions for the rest of the year.

This is probably just as well, because while “soft” sentiment data has continued to pick up since Trump’s election victory in November, the hard data hasn’t. As an example, yesterday saw disappointing updates on CPI and Retail Sales. At the same time the Atlanta Fed is forecasting GDP growth of just 0.9% in the first quarter - hardly the ideal economic environment in which to tighten monetary policy.

Stock Market Update

Audi offices raided by German police

Political hackers take on Twitter

Vedanta owner buying up Anglo American

German policed stormed through two German cities yesterday, raiding Audi offices and the homes of executives at the luxury car maker. The raids across Ingolstadt and Neckarsulm come as part of the Volkswagen diesel emissions scandal, as investigators try to establish certain Audi executive’s involvement in its parent company’s wrongdoing. An Audi spokesman has commented that they are fully cooperating with officials but would not go into any further details on the matter. Volkswagen shares fell almost 2% in Wednesday’s session, while Audi recovered the initial losses.

The latest in a long string of high-profile hacking turned to Twitter yesterday, as several high-profile accounts were taken over by supporters of Turkish President Recep Tayyip Erdogan. The tweets posted were in support of the Turkish leader who is currently in a diplomatic dispute with the Netherlands and Germany. The feud began as Dutch and German officials barred Turkish ministers from supporting a referendum that would grant Ergogan more power, with the President retaliating stating “Nazism is alive in the West”. Twitter’s share prices took a hit initially yesterday, before the rate hike gave prices a boost.

Anil Agarwal, billionaire owner of miner Vedanta Resources, is making moves to purchase a 12% stake of rival Anglo American. In a bid worth £2 billion, the Agarwal trust is allegedly making the purchase not to line up a takeover, but rather as a mere investment opportunity. Anglo American was the best performer in the FTSE 100 last year with a gain of almost 300%, so it is understandable that this has caught the eye of Agarwal, who made the purchase through a three-year convertible bond launched by JPMorgan.

Commodities Update

Gold jumps after Fed speech

Crude prices continue move upward

Gold managed to jump back up to levels not seen in 10 days, after the Federal Reserve came across significantly more dovish than expected after the rate hike announcement. The rally took the Comex futures price up more than 2% in the early hours of European trade, helped by a long-awaited slump in the dollar. Silver and copper saw even greater surges, with silver touching two week highs as the metals gained over 3% each.

Wednesday’s crude oil comeback continued into Thursday’s session as traders price in significantly lower than expected US stockpiles. The weaker dollar would have also aided the dollar-priced commodity which was in dire need of a move higher. Some of the major oil producers both in and outside OPEC have been attempting to cut production lately in a bid to push prices higher, but US shale rigs appear to come online above a psychologically well-established $50 level. With WTI approaching this level once more, investors will be looking to the next rig count to see just how this could affect supply.

Forex Update

Dollar nosedives after rate hike

Theoretically, this move doesn’t make sense. If interest rates increase, then the currency should become stronger, right? Unfortunately nothing is ever as simple as it seems when trading, as investors looked past the near-inevitable rate hike to the dovish tone of the subsequent speech from Yellen. With the rate hike already 95% priced in, this opened things up for significant downside risk, something the bears took full advantage of as the dollar traded down at levels not seen since the beginning of February.

The yen remained solid, as the Bank of Japan confirmed expectations and kept their monetary policy unchanged. The pound experienced a turbulent time during Wednesday and overnight, swinging back up to similar levels seen for much of the week. The euro enjoyed a strong rally as the Dutch election results came in. Against the dollar it touched highs not seen  since February 7th.

Upcoming Events

Amongst today’s significant economic data releases and events we have CPI data for the Eurozone, followed by the Bank of England’s monetary policy decisions, which include their interest rate and asset purchase facility. 


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Posted by David Morrison

Category: AM Bulletin

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