7 June, 2016
Stocks rose on Tuesday, matching gains on Wall Street after a cautious Fed Chair Yellen signalled policy tightening was likely to stay on hold in the short run. A policy of easy money from the Fed is positive for equities, whilst any resulting dollar weakness is supportive of commodity prices.
The focus on US monetary policy meant gains on the FTSE 100 were in line with other European indices whilst two polls showing a lead for the UK remaining in the EU caused a spike in the British pound.
Yellen’s omission of the phrase "in the coming months" for when the next rate move can be expected was taken as a signal that the June and probably July FOMC meetings are off the table. Even if US data improved, there’s probably not enough time to prepare the markets for a July hike. Yellen was generally optimistic on the US economy, saying gradual rate rises were appropriate and that she was not attaching too much significance to any single monthly report. The Fed Chair appears to think the awful May payrolls report is an aberration but wants more data to support that thesis before hiking rates.
Cable jumped 200 pips, back towards its highest levels this year, after two polls showed a narrow one-point lead for the Remain campaign. The pound’s gains quickly faded with the price spike attributed to a “fat finger trade.”
Oil and gas contributed the most to the FTSE’s gains after crude oil closed at a new 2016 high and Royal Dutch Shell announced a further cut to spending plans and more expected savings from its merger with BG Group. Shell’s conservative spending plans go some way to allay concerns that the cost of the merger with BG Group will mean an eventual cut to the dividend.
US stocks look set for a stronger open, building on the highest close this year for the S&P 500 with news that Hillary Clinton has secured enough delegate support to become the Democratic Party presumptive nominee. Mrs Clinton has been the clear favourite in the Democratic race from the beginning but, as Wall Street’s chosen candidate, there will be some relief once she’s properly in contention for the White House.
Shares of Yahoo could be active on the open after it said Verizon bid $3.0bn for its web assets only, excluding patents and real estate.
The pound has continued to come under pressure in the past couple of days sinking to new 31 year lows around the 1.2800 level against the US dollar and multi-year lows against the yen and the euro as well...
After several days of decent gains European markets slid back yesterday as concerns about the impact of last month’s Brexit vote might have not only on the UK economy, but also the economy in Europe more broadly saw investors indulge in a spot of profit taking...
Last week proved to be quite a week for stock markets with the FTSE100 posting its best week since 2011, while the S&P500 also managed to post its best week this year...
Risk premium continues to unwind on hopes that central banks will adopt accommodative monetary policies amid Brexit uncertainties. Global equity markets rebounded for a second day, led by European markets...
Despite a late recovery from the lows last week, European markets had already looked as if they would open sharply lower this morning, after US markets rolled over and fell sharply into their close on Friday, with the S&P500 hitting a three month low...
European markets have plunged today, after UK voters caught complacent markets on the hop by deciding by 51.9 to 48.1 to leave the EU, in the process delivering a devastating verdict on a poisonous Brexit referendum campaign...
Sterling has soared to five-month high at 1.4810 ahead of the EU referendum today. Is the market over optimistic? The rally of risk assets over the past few days has also indicated that the market is trying to price in a remain vote.
While the opinion polls continue to remain mixed with respect to the UK referendum, equity markets appear to be sailing on serenely as we lead up to tomorrow’s vote, and we mercifully enter the final day of campaigning...
Despite hitting three month lows last week European stocks managed to stage a late recovery at the back end of last week, and though they did finish the week lower, the late momentum gained is set to translate into a strongly positive start to the new week...
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